2006 ASC Pty Ltd Annual Report · & Cox and Navantia. Significant progress has been made towards meeting DMO’s objectives. The establishment of the AWD Systems Centre in Adelaide

2006 ASC Pty Ltd Annual Report

2006

ASC

Pty

Ltd

Ann

ual R

epor

t

01 Company Profile

02 2005/06 Highlights

03 Financial Summary

04 Chairman's Report

06 Board of Directors

08 Managing Director’s Report

10 Corporate Governance

14 Review of Operations

14 Submarines

22 Ships

26 Corporate

27 Our People

27 Health

27 Safety

32 Knowledge Development

33 Personnel Development

35 Environment

38 Financial Report

88 Corporate Directory

Contents

This report contains content that was tabled in Parliament

as well as additional promotional material.

01ASC Annual Report 2006

Company Profi leASC Pty Ltd is committed to building the

most advanced naval warships in the

nation. This commitment has seen ASC

establish Australia’s largest repository of

naval high-end skills, as well as working

relationships with over 1,400 suppliers,

capability partners, universities and

specialist providers.

Formerly known as Australian Submarine

Corporation, ASC successfully built

Australia’s fleet of Collins Class submarines

for the Royal Australian Navy (RAN) and, in

doing so, established itself as a leader in

the nation’s defence industry.

For 21 years, ASC has built on its strengths

and commitments which led to the company

being awarded the role of shipbuilder for

the RAN’s Air Warfare Destroyer (AWD)

Program. This project will see the most

advanced and complex warships ever built

in Australia being constructed by ASC at its

Osborne, South Australia facility.

Today, ASC is also responsible for

the ongoing design enhancements,

maintenance and support of the Collins

Class submarines as part of a 25 year,

multi-billion Through-Life Support contract

which the company signed in 2003. The

support activities for the Collins Class

submarines are carried out at ASC’s South

Australian and Western Australian facilities.

ASC employs over 1,000 of the very best

personnel in their fields of speciality. The

company’s core business as a submarine

builder, maintainer and up-grader, as well

as the AWD shipbuilder, will ensure ASC

retains and develops its high-end skills

base in the future.

ASC aspires to a set of values which are

the guiding principles that define how it

conducts its business and what it stands

for as a company:

> Performing through teaming and

pragmatic excellence

> Commitment to customer outcomes

> Relentless improvement and learning

> Safety, integrity and empathy for others

in all endeavours

02

2005/06 HighlightsCompletion of HMAS Collins’ Full-Cycle

Docking, including repair of inherited

defects and special forces' modifications.

Continuation of capability partnership with

United States submarine designer and

builder Electric Boat Corporation until 2008.

HMAS Sheean wins the Royal Australian

Navy’s prestigious 2005 Gloucester Cup for

being foremost in all aspects of operations,

safety, seamanship, reliability and unit

level training.

Establishment of the Master of Marine

Engineering course in collaboration with

Defence Materiel Organisation’s Skilling of

Australia’s Defence Industry (SADI) program

and the University of Adelaide.

Establishment of the Master of Military

Systems Integration course in collaboration

with SADI, the University of South Australia,

BAE Systems and Saab.

ASC signs its first supplier, Weir Strachan

& Henshaw Australia, to provide services

entirely under the Collins Class submarines

Through-Life Support contract.

Completion of all platform modification

design work required to support the

installation of the Collins Class’

replacement combat system on

HMAS Waller.

Finalisation of all formal agreements

with the South Australian Government’s

Port Adelaide Maritime Corporation for

the delivery of the Osborne Common

User facility, which includes a new wharf,

ship lift, dredging and ship consolidation

sites in support of ASC’s shipbuilding role

for the Hobart Class air warfare destroyers.

Completion of the design for a new,

state-of-the-art, submarine maintenance

facility in Western Australia, to be

established behind the Common User

Facility at Henderson.


Financial SummaryASC and its controlled entities achieved

a consolidated after tax profit for the year

ended 30 June 2006 of $18.5 million,

compared to $16.1 million after tax profit

in 2005.

The directors have declared a fully-franked

final dividend of $6.35 million. The dividend

was paid on 5 September 2006. The final

dividend is in addition to the interim fully-

franked dividend of $4.75 million, paid on

24 February 2006. The 2005/06 total

dividend represents a distribution to the

shareholder of $11.1 million, compared with

$9.7 million in the 2004/05 financial year.

ASC has adopted the Australian equivalent

of the International Financial Reporting

Standards (AIFRS) since 1 July 2005.

Good financial reporting is fundamental

to efficient markets, which rely on the

application of strong accounting standards.

AIFRS provides that framework globally.

In light of the global nature of AIFRS, it is

in Australia’s long term strategic interest to

keep pace with world developments and to

adopt AIFRS.

AIFRS is not a technical accounting

change, but a strategic change to which

ASC responded during the 2005/06

financial year by seeking to:

- understand the financial impact of

AIFRS adoption;

- identify and implement required

system changes;

- train its staff; and

- liaise with stakeholders and explain the changes to ensure a smooth transition.

The successful achievement of this

required a significant commitment of time

and resources by ASC, which would not

have been possible without the dedication

and professionalism of ASC’s employees.

5

10

15

20

$ M

illion

2003 200520042002 2006

50

150

250

100

200

300

$ M

illion

2003 2006200520042002

Revenue from rendering of services

Financial income

Other income*

EBITDA

EDIT

Operating profitbefore tax

Shareholder’s equity

Return on equity (%)

Dividend (fully-franked)

Total assets

2001/02

$m

141.8

3.3

1.2

3.6

(1.6)

1.7

53.2

0.2

0.0

196.7

2002/03

$m

148.4

4.3

6.0

9.2

4.7

8.9

59.1

10.0

0.0

236.7

2003/04

$m

243.6

4.5

7.8

23.0

19.2

23.6

107.3

15.0

5.0

243.5

2004/05

$m

217.0

5.6

6.7

18.3

14.9

20.5

107.3

15.0

9.7

283.9

2005/06

$m

254.7

5.9

0.3

24.2

20.5

26.3

114.2

16.2

11.1

245.9

* adjusted for rounding

Financial Year

Chairman’s Report

04

The 2005/06 financial year marks ASC’s

first year as a multi-project company.

Having successfully completed the Collins

Class submarine build program, the

company’s challenges are to provide value

for money through-life support (TLS) to the

submarine fleet and support the Air Warfare

Destroyer (AWD) Program Alliance that will

design and produce the new generation of

AWDs – the Hobart Class - for the Royal

Australian Navy (RAN). The measure of

ASC’s success will be its ability to achieve

the customer’s time, cost, quality and

capability requirements for both programs.

Financial

The ASC group achieved profit after tax

of $18.5m ($16.2m in 2004/05) based on

annual revenues of $260.9m ($229.3m in

2004/05), while also incurring substantial

costs in supporting the AWD Program.

Profits from the building of the AWDs

will not flow for some time. The Board’s

objective in this regard is to ensure that

ASC’s earnings are sustainable and

predictable over the longer term.

Submarines

It is pleasing that the company earned

a high proportion of the performance

incentives available for its submarine work

in the year; up on 2005. This reflects the

strong focus the Submarines business

unit has brought to bear on ensuring that

the customer’s operational outcomes are

paramount.

In May 2006, the Chief Operating Officer

Submarines – Mr Doug Callow – was

appointed as the AWD Alliance General

Manager, for the Hobart Class AWD

Program, by agreement between the

AWD Alliance participants. We thank

Mr Callow for his sustained contribution

to the submarine business since 1992.

In his place, the Board promoted Mr Stuart

Whiley to the position of General Manager

Submarines.


Design and Engineering

The Design and Engineering group

continues to expand its capability to

support submarines and to further develop

the nation’s largest repository of high-end

naval engineering skills. Working closely

with ASC’s capability partner, Electric Boat,

and a number of small/medium enterprises,

the Design and Engineering group has

supported key capability upgrades to the

submarines to equip them for Special

Forces, the Heavy Weight Torpedo, the

Replacement Combat System and several

other significant capability enhancements.

Shipbuilding

The AWD Program was ASC’s primary new

focus during 2005/06. The emphasis has

been to establish a co-operative alliance

environment with DMO and Raytheon

Australia (the preferred Combat System

Systems Engineer), and also the two

competing ship designers, namely Gibbs

& Cox and Navantia. Significant progress

has been made towards meeting DMO’s

objectives. The establishment of the

AWD Systems Centre in Adelaide has

facilitated work on the next objectives,

namely selection of the ship design and

preparation of the business case for

Second Pass Approval. This is the process

required for Government ‘go ahead’ for the

Program to proceed.

ASC’s capability partner, Bath Iron Works,

continues to provide valuable support

to ASC.

Privatisation

The Commonwealth’s plans to privatise

ASC took an important step forward

in 2005/06 with the Government

commissioning a Privatisation Scoping

Study by Carnegie Wylie & Company

(business advisers) and Freehills (legal

advisers). ASC supported the Scoping

Study process and welcomes the

Commonwealth’s desire to return the

company to private ownership.

During the coming year, the Board

will continue to aid in the achievement

of the Government’s objectives for the

sale of ASC, to be completed in 2008,

which are:

- to preserve and enhance the long-term

viability of ASC, both financially and

operationally, including ASC’s ability to

perform its role in relation to the Collins

Class Submarine Through-Life Support

Contract and the Air Warfare Destroyer

Program;

- to enable ASC to contribute to an

efficient and competitive Naval

Shipbuilding and Repair Sector which

is capable of delivering the best defence

technology available to meet Australia’s

national security needs;

- to ensure the fair and equitable

treatment of ASC’s employees;

- to minimise ongoing risk and liabilities

to the Commonwealth following

privatisation; and

- subject to the above, to maximise sale

proceeds, and to achieve a value for

money outcome for the Commonwealth

on a whole-of-Government basis.

Board of Directors

Mr Stephen Young’s term as a director

expired on 30 June 2006. Mr Young made

a valuable contribution to the Board’s

deliberations since his appointment in July

2002. In particular, his work as Chairman

of the Audit Committee was greatly

appreciated by his Board colleagues.

Looking Forward

ASC continues to build on its achievements

with a vision to develop and deliver

competitive advanced engineering design

and integration services for major defence

capability requirements; and to broaden

this competence over time. To support this

vision, ASC will continue to strive towards

its objective of becoming the nation’s

pre-eminent builder of naval warships by

achieving its customer’s time, cost, quality

and capability requirements.

The Board thanks our shareholder,

Senator Nick Minchin, for his confidence

and support, and thanks management and

staff for their contribution to ASC’s success

in 2005/06.

John B Prescott AC

Chairman

06

Age 67. Director since 10 November 2000

and Member of the Audit Committee. Former

Chief Executive Officer of BTR Automotive

Asia Pacific. Former Chairman of Eurovox,

Unidrive, China Feneral Plastics Corporation

(Taiwan), Taita Chemical Company (Taiwan),

Asia Polymer Corporation (Taiwan) and BTR

Motherson Automotive (India). Former Director

of BTR Nylex, Westlake Styrene Corporation

(USA), Titan Petrochemicals (Malaysia) and

Titan Polymers (Malaysia).

Board of Directors

John Prescott ACBComm (Industrial Relations)

Chairman

Age 46. Managing Director since 11 October

2004. Former Managing Director of Thales Air

Traffic Management (Australia) and Regional

Director Asia, and former Director of Business

Development for ADI Limited. Twenty years’

experience in systems integration and

development, including six years as General

Manager of ADI’s software and systems

business, and ten years with Vipac Engineers

and Scientists. Companion of Engineers

Australia and Member of the Australian Institute

of Company Directors.

General (Rtd) John Baker AC DSMBEng

Non-Executive Director

Charles BagotLLB (Hons)



Age 65. Chairman since 3 November 2000 and

Member of the Nomination and Remuneration

Committee. Chairman of Queensland Rail

and Sunshine Coast Business Council.

Director of Newmont Mining Corporation.

Former Chairman of Horizon Private Equity

Management Pty Ltd and former Managing

Director and Chief Executive Officer of BHP.

A Global Counsellor of The Conference Board

and a Member of WorkCover (Victoria) Safety

Development Fund Panel and President’s

Circle, AustralAsia Centre, Asia Society.

Gregory TunnyMBA, BSc (Physics)

Managing Director and

Chief Executive Officer

Graeme BulmerDip.Chem, Dip.ChemEng


Age 70. Director since 1 July 2002 and

Member of the Audit Committee. Former

Chief of the Australian Defence Force,

Director Joint Services Policy, Commander

Second Military District, Chief of Logistics

(Army), Head of Defence Intelligence

Organisation and Vice Chief of the Australian

Defence Force. Fellow of the Institute of

Engineers (Australia) and Academy of

Technological Sciences and Engineering.

Age 59. Director since 3 November 2000 and

Member of the Nomination and Remuneration

Committee. National Head of law firm Piper

Alderman’s Corporate Division. Council

Member of the University of Adelaide and Saint

Mark’s College. Member of the Corporations

Law Committee of the Australian Institute of

Directors, the Australian Institute of Directors

South Australian Council, the Law Council of

Australia’s Business Law Section Corporations

Law Committee, International Bar Association,

The Australian Mining and Petroleum Law

Association and The Securities Institute.

Former President of the Australian Institute of

Company Directors SA/NT and former member

of AICD’s National Board of Directors.

8

ASC’s success during 2005/06 reflected

the implementation of several improvement

strategies, including:

- improved internal and external

collaboration;

- commitment to customer outcomes first;

- focus on knowledge capture and

life-long learning; and

- dedication and resolve to operate in an

environment free of injuries and safety

hazards.

Safety in the Workplace

ASC’s group Lost Time Injury Frequency

Rate (LTIFR) was 3.4 per million man hours

(pMMH) at 30 June 2006 and below the

important threshold of 5 pMMH for four

consecutive months. This safety result puts

ASC clearly in best practice territory, given

the all industries average of 14.9 pMMH.

Operating Performance

Across the business, our financial and

operational performance has been

very strong.

Meeting the customer’s schedule

requirements and operating within a more

effective and cost efficient framework

delivered outstanding outcomes on the

Collins Class Through-Life Support Contract

for our customer and, consequently, record

financial results in 2005/06.

ASC achieved:

- services revenue of $254.7 million

(up 17% over 2004/05);

- total revenue of $260.9 million

(up 14%);

Managing Director’s Report


- operating profit after tax of $18.5 million

(up 14%); and

- shareholders equity of $114.2 million

(up 6%).

These impressive results confirm that ASC’score strategy of total commitment to meeting its customer’s objectives, and thereby maximising incentive payments, is proving successful.

Twelve successful submarine maintenance activities were conducted by Western Australia personnel this year, all completed safely and to their required operational standards, with eleven accomplished on time.

This is a tremendous achievement in lightof the fundamental shift ASC hasexperienced in the submarines’ upkeep usage cycle, resulting in longer but less frequent maintenance activities. This change is designed to increase the overall availability of the submarines for the Royal Australian Navy (RAN).

Activities at Osborne this year centred on FCD work for HMAS Waller, which will be returned to the RAN in early 2007; the first submarine to have the US Navy-developed replacement combat system installed. HMAS Dechaineux arrived at Osborne just prior to the end of the 2005/06 year and will subsequently receive much attention

throughout 2006/07 and 2007/08.

Enhancing ASC’s Capability in Western Australia (WA)

There are now normally five operational submarines based in WA. This necessitates the need for ASC to provide a substantive, dynamic and responsive support capability in WA. The company has steadily built its skilled resource base in the west over the last decade to achieve this.

In order to deliver a world’s best practice support service in WA, ASC is investing in a new, state-of-the-art submarine maintenance facility, located at the Australian Marine Complex at Henderson, south of Perth in WA.

This facility is designed with construction

scheduled to commence in 2006. It will be

operational in 2008.

Air Warfare Destroyer (AWD) Program

ASC is committed to the success of

the AWD Program and has enjoyed a

collaborative and integrated working

relationship with the other AWD Alliance

participants.

During the 2005/06 year, ASC mobilised

almost 100 staff to the AWD Systems

Centre in Felixstow, Adelaide, which

was officially opened by the Minister for

Defence, Dr Brendan Nelson, on 3 August

2006. ASC has eagerly supported both the

Evolved and Existing AWD design options.

The Australian Government will consider

Second Pass Approval for the Program

and select the design to be built around

mid-2007.

Over the coming year, further mobilisation

and recruitment will continue as ASC

contributes to Phase 2 design studies and

prepares for implementation/construction

in Phase 3.

Extension of Capability Partnership

With an objective to continue to provide

the RAN with greater Collins Class design

capacity, ASC was pleased to extend its

relationship with its submarine capability

partner, Electric Boat, until 2008.

The new contract will see a continuation of

Electric Boat’s support to further enhance

ASC’s submarine technical capability with

a particular focus on continuous upgrades

and supporting the company in its long

term objective of co-designing Australia’s

next generation of submarines.

ASC continues its shipbuilding capability

partnership with Bath Iron Works and

looks forward to their ongoing contribution

and support during 2006/07 to the AWD

shipbuilding task.

Meeting our Customer’s Needs

While currently performing well, ASC

is determined to achieve or exceed

best practice standards in all of its core

activities. The company has established

the newly created position of Executive

Manager - Change and Improvement to

provide a focal point and an executive

champion for the many change and

improvement initiatives within ASC.

ASC’s Executive Manager – Change and

Improvement is responsible for ensuring the

various change and improvement initiatives

currently underway align with company

strategy and consolidate to deliver

a significant tangible and measurable

benefit to the customer and the company.

Beyond 2005/06

There was no shortage of challenges

throughout 2005/06, but the company

overcame all. I expect the coming year

will bring a new wave of opportunity and

challenges; we are ready.

With 23 years of the Collins Class Through-

Life Support program left to run, and with

the critical role of shipbuilder for the AWD

Program ongoing for at least ten years,

ASC is strong and looks forward to an

exciting future.

Greg Tunny

Managing Director

10

Corporate Governance

ASC has adopted a corporate governance

protocol which establishes:

- charters for the Board, Audit Committee

and Nomination and Remuneration

Committee; and

- a Code of Conduct for directors

and executives.

The Board monitors performance against

its corporate governance objectives at

each Board meeting.

Ministerial Directions

In accordance with its Constitution, ASC

is subject to direction by the Minister.

No directions were given to ASC by the

Minister during the 2005/06 year.

Status

ASC is a proprietary company limited by

shares registered under the Corporations

Act and is subject to the Commonwealth

Authorities and Companies Act 1997 (Cth)

(CAC Act). All the shares issued in the

capital of ASC are owned by the Minister

for Finance and Administration (Minister).

Directors

All directors, other than the Managing

Director, are appointed for a term by

the Minister. The remuneration of the

directors is determined by the

Remuneration Tribunal under the

Remuneration Tribunal Act 1973 (Cth).

As at 30 June 2006, the Board was

comprised as follows:

Name Appointed Expires

John Prescott AC (Chairman) 3 November 2000 30 June 2009

Greg Tunny (Managing Director) 11 October 2004 -

Charles Bagot 3 November 2000 31 November 2007

Graeme Bulmer 10 November 2000 31 December 2007

General (Rtd) John Baker AC DSM 1 July 2002 31 December 2007

Stephen Young 1 July 2002 30 June 2006

* Stephen Young resigned on 30 June 2006

Corporate GovernanceBoard

Under the Board Charter, the Board is

responsible for:

- overseeing ASC, including control

and accountability systems;

- appointing and monitoring

the performance of the

Managing Director and the

Company Secretary;

- approving other executive

appointments, organisational

changes and senior management

remuneration policies and practices;

- monitoring and reviewing senior

management’s performance and

implementation of strategy, and

ensuring appropriate resources

are available;

- determining the strategy for ASC

and monitoring the performance

of objectives;

- approving and monitoring the progress

of major capital expenditure, capital

management, acquisitions and

divestitures, as well as financial and

other reporting;

- approving budgets and other key

performance indicators, reviewing

ASC’s performance against them and

ensuring that corrective action is

devised and implemented as necessary;

- reviewing and ratifying systems of risk

management and internal control and

legal compliance to ensure appropriate

compliance frameworks and controls

are in place;

- reviewing and overseeing the

implementation of ASC’s Code of

Conduct for directors and

executives; and

- appointing Board committees and

approving the composition, and

any charters, of Board committees.

11

Group Composition

The ASC Group is comprised as follows:

On 11 June 2004, ASC was proclaimed

as a Government Business Enterprise

under the CAC Act.

Audit Committee

Under the Audit Committee Charter, the

objectives of the Audit Committee are to:

- help the Board achieve its

objectives in relation to:

- financial reporting;

- the application of accounting

policies;

- business policies and

practices; and

- internal control.

- maintain and improve the quality,

credibility and objectivity of the

financial accountability process

(including financial reporting on a

consolidated basis);

- ensure effective internal and external

audit functions, and communication

between the Board and the external

and internal auditors; and

- ensure compliance strategies and

compliance functions are effective.

As at 30 June 2006, the committee

comprised Stephen Young (Chairman),

Graeme Bulmer and General (Rtd) John

Baker AC DSM.

Nomination and Remuneration Committee

The Nomination and Remuneration

Committee was established on 5 August

2004. Under its charter, the objectives of

the Committee are to:

- make recommendations to the

Board on the following matters:

- suggested appointments to the Board

for consideration by the Minister;

- remuneration of the Managing Director

(after considering the performance of

the Managing Director against agreed

goals and the requirements of the

Remuneration Tribunal);

- remuneration of the Managing

Director’s direct reports (after

considering the performance of

those direct reports against their

agreed goals); and

- guidelines for the remuneration

of ASC management.

- consider any other item referred to it by

the Board from time-to-time; and

- consider any material to be

included in ASC’s Annual Report.

As at 30 June 2006, the committee

comprised John Prescott AC (Chairman)

and Charles Bagot.

ASC Engineering Pty Ltd ASC Shipbuilding Pty Ltd

ASC Modules Pty Ltd ASC AWD Shipbuilder Pty Ltd

Minister

ASC Pty Ltd

ASCOV Pty Ltd

ASC Annual Report 2006

12

Attendance

Attendance at Board and committee

meetings during 2005/06 was as follows:

Audit

ASC’s external auditor is the Australian

National Audit Office (ANAO). KPMG has

been appointed as ANAO’s agent for the

purposes of ASC’s audit.

The Audit Committee is charged with the

responsibility for the financial internal audit

function. The work scope for this function

includes determining whether ASC’s

network of financial risk management,

control and governance processes, as

designed and represented by management,

is adequate and functioning in an effective

manner to ensure:

- financial risks are appropriately identified

and managed;

- interaction with the various governance

groups occurs as required;

- significant financial, managerial and

operating information is accurate,

reliable and timely;

Director Board Audit Nomination and Committee Remuneration Committee

Held Attended Held Attended Held Attended

John Prescott AC (Chairman) 16 16 - - 6 6

Greg Tunny (Managing Director) 16 15 - - - -

Charles Bagot 16 16 - - 6 6

Graeme Bulmer 16 16 5 5 - -

General (Rtd) John Baker AC DSM 16 16 5 5 - -

Stephen Young 16 15 5 5 - -

Corporate Governance - continued

- employees’ actions are in compliance

with policies, standards, procedures and

applicable laws and regulations;

- resources are acquired economically,

used efficiently and adequately

protected;

- programs, plans and objectives are

achieved;

- quality and continuous improvement are

fostered in ASC’s control process; and

- significant legislative or regulatory

issues impacting the organisation

are recognised and addressed

appropriately.

The Audit Committee is responsible for

approving the program and monitoring

compliance.

Code of Conduct

ASC has implemented a Code of

Conduct for directors and executives

which seeks to:

- articulate the high standards of

honest integrity, ethical and

law-abiding behaviour expected

of directors and executives;

- encourage the observance of

those standards to protect and

promote the interests of

shareholders and other

stakeholders;

- guide directors and executives

as to the practices considered

necessary to maintain confidence

in the ASC Group’s integrity; and

- set out the responsibility and

accountability of directors and

executives to report and investigate

any reported violations of this Code

of Conduct or unethical or unlawful

behaviour.


Risk Management

Sound and visible risk management

practice underpins ASC’s planning and

decision making. As such, ASC adopts

a structured and consistent approach to

the effective management of risk, which

complies with Australian Standard AS/NZ

4360:2004 Risk Management.

ASC’s Risk Management Committee held

10 meetings during 2005/06 to continue to

support the Audit Committee in discharging

its responsibilities for risk management

at ASC.

Legal Compliance

In 2005 ASC established its Legal

Compliance Program which complies

with Australian Standard 3806. The

program is managed by ASC’s Legal

and Risk and Business Assurance

departments and covers:

- trade practices;

- occupational health and safety;

- environment;

- employment;

- criminal code;

- privacy; and

- defence export controls.

All employees undertake the compliance

training annually.

The Audit Committee is responsible for

approving the program and monitoring

compliance.

Management

ASC’s management processes are

documented in the Corporate Management

System. The empowering document is

known as CMS1001. The Board authorises

this policy document which incorporates

authorisation levels, delegations and

corporate structure.

14

Submarines

Ross Milton (59)

Deputy Chief Executive Offi cer BE, FIEAust, CPEng

Robert Lemonius (55)

Western Australia Submarine Operations Manager Commonwealth Centenary Medal 2003

Stuart Wiley (47)

General Manager SubmarinesBSc(Hons), FIEAust, CPEng, MAIPM MPD

Jack Atkinson (56)

General Manager Design and EngineeringBE, MEngSci, FIEAust, CPEng


The 2005/06 year was dominated by maintenance activities undertaken in ASC’s Western Australian operations, an increase in overall sea days from previous years and a corresponding decrease in maintenance days.

As a result, the 2005/06 usage upkeep

cycle changed resulting in longer, less

regular maintenance activities designed

to increase the overall availability of the

submarines for the Royal Australian

Navy (RAN).

Following the completion of HMAS

Collins’ Full-Cycle Docking (FCD) at ASC’s

Osborne facility, for the first time ASC’s

South Australian facility had one submarine

to concentrate on, which resulted in a

substantial change to the geographical

location of the workload mix for the

2005/06 period. In light of this, ASC’s

Western Australian operations required

additional Osborne support.

With the return of HMAS Collins into

service in October 2005, and the

successful certification extension of HMAS

Dechaineux to May 2006, there were

five in-service submarines for six months

during the 2005/06 year. This was a first

for ASC and the RAN, and has provided

an excellent insight into the workload and

resources required to support the Collins

Class submarines in the future.

Also during the year, five submarine

maintenance activities were completed in

Western Australia, with an additional seven

Self Maintenance Periods (SMP) supported

involving RAN and ASC personnel – six

alongside their home port of HMAS Stirling

in Western Australia and one in Guam.

HMAS Collins

HMAS Collins’ FCD was completed with

the transfer of materiel control to the RAN

on 29 July 2005 and the subsequent return

to service in October 2005.

During the 2005/06 period, ASC

completed two SMPs and one Intermediate

Maintenance Availability (IMAV) on HMAS

Collins with all activities completed on time.

HMAS Farncomb

Three maintenance activities, including

two SMPs and one Intermediate Docking

(ID) were undertaken on HMAS Farncomb

in Western Australia. All activities were

completed on time.

Mark Gobell (53)

Works Manager BTech.Mech.Eng, FIEAust

Alf Aschenbrucker (57)

Group Quality Manager B.App.Sc Grad.Dip (Bus Admin)

16

Submarines - continued

HMAS Waller

HMAS Waller’s FCD continued during

the 2005/06 year, with major upgrades

incorporated into the maintenance activity,

including platform design changes and

installation of the majority of a new

replacement combat system (RCS)

platform, commencement of system set-

to-work and completion of a large portion

of equipment modifications to facilitate

installation of a new (and more lethal) heavy

weight MK48 torpedo. These changes

are being implemented on a Collins Class

submarine for the first time.

Other design enhancements undertaken

on HMAS Waller include the introduction of

special forces’ capability, improvements to

the halon fire fighting system; and changes

to the fuel system, platform flexible hoses,

gas detection system and external

communication systems.

In addition, the 2005/06 period saw the

following activities undertaken during

HMAS Waller’s FCD:

- completion of the first Collins Class

submarine full 12A diesel engine

overhaul and maintenance during

a FCD;

- conduct of a world first in-situ

armature main motor repair;

- undertaking of preparations to

facilitate installation of enhanced

main submarine battery cells;

- completion of all submarine

pressure hull and tank corrosion

repairs with re-preservation well

in hand;

- commencement of modifications

to provide automatic operation of

the sewage system;

- introduction of modifications to improve

the corrosion resistance of cable

pressure hull penetrations; and

- completion of the majority of the

overhaul of submarine equipment and

systems with rebuild well in hand.

HMAS Dechaineux

HMAS Dechaineux arrived at Osborne

to begin its FCD just prior to the start

of the 2006/07 financial year. During

the docking, HMAS Dechaineux will be

significantly enhanced to increase its

capability with inclusion of heavy weight

torpedo enhancements, a replacement

combat system, sewage automation,

halon fire fighting pipe work and gas seals,

shut all hull valves and special forces’

modifications.

Dedicated resources are being allocated to

HMAS Dechaineux to safeguard the FCD

program and support the transition

of labour from HMAS Waller’s FCD.

HMAS Dechaineux’s FCD has two critical

elements:

- the volume of work to be undertaken,

and the rate of expenditure, is far

greater than previous FCDs; and

- final designs are yet to be completed

for the implementation of critical

enhancement activities.

A large element of growth work was

discovered during previous FCD

maintenance activities, which has

subsequently been included as part of

the planned maintenance work scope

for HMAS Dechaineux.

HMAS Sheean

During the 2005/06 year HMAS Sheean

was named the 2005 recipient of the

Gloucester Cup.

The Gloucester Cup is awarded each year

to the major fleet unit or submarine that has

been foremost in all aspects of operations,

safety, seamanship, reliability and unit

level training.

HMAS Sheean is the next submarine

to undergo a Certification Extension

Docking (CED), which will be undertaken

Dan MenisProject Administrator

The refreshing, sunny lifestyle in Western

Australia is a far cry from the deep, dark

depths of the ocean, which is where we

found Dan Menis.

Dan is one of our project administrators

in the West and, amongst other things,

offers us a unique perspective about

what it’s like to be a submariner. And

he should know, for he was one – for

three years!

Because Dan knows so much about

the submarines and their mechanics,

we immediately put him to work on

tasks like urgent defects and self

maintenance periods.

While we appreciate Dan for the

knowledge and experience he brings

to ASC as a former submariner, he

appreciates the camaraderie and

laughs he has with his ASC workmates

– essential qualities we have learnt, both

above and below the surface.

17

in Western Australia for the first time.

Successful completion of HMAS

Sheean’s CED will see another five boats

simultaneously operational when HMAS

Waller completes her FCD. Also during

2005/06, HMAS Sheean completed an

IMAV and a SMP in Western Australia.

HMAS Rankin

HMAS Rankin completed two maintenance

activities during 2005/06 – a SMP and

an IMAV. Both activities were completed

on time.

No.

of W

eeks

Alongside

HMAS Stirling

Docking

Western Australia

Osborne,

South Australia

Collins Farncomb

HMAS

Waller

HMAS

Dechaineux

HMAS

Rankin

HMAS

Sheean

Overseas

Deployment

SMP 2SMP 2

ID 12

FCD52

SMP 2CEM 2

FCD 8

SMP 2

IMAV 8

CED 4

IMAV 8

SMP 4

IMAV 8

SMP 2SMP 3

FCD 4

Maintenance Availabilities


Availability ResultHMAS Collins FCD ✓

HMAS Farncomb SMP ✓

HMAS Dechaineux CEM ✓

HMAS Rankin SMP ✓

HMAS Collins SMP ✓

HMAS Sheean IMAV 3 days lateHMAS Dechaineux CEM ✓

HMAS Farncomb ID ✓

HMAS Sheean SMP ✓

HMAS Collins IMAV ✓

HMAS Rankin IMAV ✓

HMAS Farncomb SMP ✓

HMAS Collins SMP ✓

SMP - Self Maintenance Period IMAV - Intermediate Maintenance AvailabilityCEM - Certification Extension Maintenance ID - Intermediate Docking

18

Performing and


through teaming pragmatic excellence

To perform in our complex technical and business environment, we work as a team and collaborate effectively with customers, partners and suppliers. We use our training, skills and experience in a pragmatic ‘can do’ manner to consistently achieve excellent outcomes within schedule and budget constraints.

20

Submarines - continued


ASC’s Design and Engineering (D&E) team

supports the Collins Class submarines in

maintenance and by implementing new

technology and new capability designs

as required.

At the completion of each submarine

maintenance activity, D&E has the

responsibility for certifying that the

submarine is fit and safe to proceed to

sea, based on a safety analysis and an

assessment of the material state of the

submarine platform.

D&E has continued to grow in maturity

over the last twelve months, with a further

twelve senior submarine experienced

designers and engineers joining the team,

as a result of ASC’s successful international

recruitment campaign.

ASC’s D&E team is now comprised of

276 personnel with expertise in the

following areas:

- platform engineers/technicians

(mechanical, structural, acoustic,

electrical);

- combat system and

communications engineers/

technicians;

- integrated lifecycle support;

- certification management;

- safety and SUBSAFE;

- maintenance support;

- detail designers/CAD operators;

and

- project managers/engineers.

During 2005/06, the D&E team continued

to aggressively deal with obsolescence and

the imperative for technology upgrades.

The availability of spares, optimisation of

maintenance and reliability of improvements

are key factors in lifting submarine availability

levels and operational performance.

D&E made substantial progress in its

designer capability, with much effort

on achieving results with increased

efficiencies. ASC’s ‘Designer Continuous

Improvement’ program will continue

to push improvements in the areas of

Key Performance Indicators, individual

competency assessments matched to

training needs, engineering tools, complex

design and customer communication. In

conjunction with this, the internationally

recognised Capability Maturity Model

Integrated (CMMI) improvement program

will commence this coming year with a

Level 3 ‘measure’ to be achieved before

the end of the decade.

ASC’s submarine capability partner, Electric

Boat, has continued to work with the D&E

team in the refinement and improvement

of maintenance support methods in the

specialist areas of engineering for concept

design studies and platform design.

John Black

Electrician

We doubt John Black ever thought he

would eventually be working with his son

when he joined ASC seven years ago.

You would think John’s job is unique

enough – electrical work often carried

out in confi ned spaces with exacting

demands of safety, specifi cations and

standards. Couple that with working

every day with his third-year electrical

apprentice son Greg, it’s no wonder John

is always on his toes.

Born and raised in Scotland, John

trained and worked as an electrician

in the UK, including a stint working on

North Sea oil rigs, before emigrating to

Australia in 1990.

Today, we keep him plenty challenged

with meticulous electrical work on the

Collins Class submarines and, of course,

passing along his knowledge to his son.

21

The D&E business unit has also made

further progress towards increased

submarine reliability and improved

efficiency. In addition, D&E continued

to consolidate submarine design and

knowledge, and build upon this learning

by undertaking more complex design

tasks, to ultimately provide the customer

with the option to embark on a new

submarine design in the future.

The Collins Class submarines continue to

embrace technology from a wide range of

international suppliers in their maintenance

and design upgrades.

Submarine Training

ASC and the RAN completed the first year

of the new five year training contract for the

management and provision of submarine

training services during 2005/06.

Throughout the year, implementation of the

new contract has progressed very well with

both ASC and the submarine community

working closely together to train new

submariners in the skills they require to

enable them to become members of an

operational submarine.

Infrastructure Development

ASC has completed the design of a new

submarine maintenance facility, to be

built, as part of the redevelopment of the

Australian Marine Complex, in Henderson,

Western Australia.

The site will be established on one of the

super blocks behind the Common User

Facility and will create improved submarine

docking and maintenance capabilities, as

well as an improved working environment

for staff.

The Western Australian Government is

developing the Common User Facility

infrastructure, including the floating dock,

that will allow ASC to undertake all docking

work in the new facility from 2008.


Kathryn Varney

Non-Destructive Test Trainee

In two years’ time, Kathryn Varney will

become a highly qualified non-destructive

testing technician, and will be able to

apply her skills and knowledge to testing

metals for defects – a pretty fundamental

job in our business you would think.

At ASC, we believe that employee

training and knowledge development is

paramount to ensuring Royal Australian

Navy vessels are in tip top condition

and, as such, we devote considerable

resources to up-skilling our people.

Kathryn is undertaking a Non-Destructive

Testing traineeship with ASC and, as a

part of the program, is also studying a

Certificate III in Mechanical Engineering

and an Advanced Diploma of Mechanical

Engineering with TAFE. In addition to

Kathryn’s offsite learning, we give her

plenty of time to study during work hours.

Upon completion Kathryn will be able to,

as a highly qualified technician, work on

significant projects at the very heart of

submarine safety, or expand into other

areas of engineering if she so desires.

22

ASC’s shipbuilding operations has concluded a very successful operating year building on its successful selection in May 2005 as the shipbuilder for the SEA 4000 Air Warfare Destroyer (AWD) Program.

John Gallacher (57)

Chief Executive Offi cer ASC Shipbuilding

Ships

Doug Callow (57)

AWD Alliance General ManagerBSc, MSc, FIEAust, CPEng

Martin Edwards (42)

General Manager ASC ShipbuildingBMgt, Dip.Eng, CPEng

23

These activities prepare the numerous

deliverables to underpin Second Pass

Approval in the second half of 2007,

during which time a choice of the

Preferred Designer will be made by

the Australian Government.

Infrastructure Development

2005/06 saw much headway on the

various infrastructure projects to support

the AWD Program, including the finalisation

of all formal agreements with the South

Australian Government for the construction

of the Common User Facility (CUF).

ASC has supported the Port Adelaide

Maritime Corporation with preliminary

design planning of the CUF, which includes

a new wharf, ship lift, dredging and the

development of ship consolidation sites,

in addition to supporting master planning

activities associated with Techport Australia

(formerly known as the Osborne Maritime

Precinct).

Development of the education and facility

briefs for the future Maritime Skills Centre,

to be located at Techport Australia, was

also undertaken during the 2005/06 period.

JP 2048 Amphibious Ships Program

ASC was engaged by various Amphibious

Ships Program tenderers and industry

parties to provide module fabrication

support and industry planning assessments

during the year.

Chris StevensInternal Auditor

Chris Stevens, the former KPMG and

PriceWaterhouseCoopers accountant,

had no idea what was in store for

him when he signed up as a project

accountant in 2002.

With an expectation of tinkering with

some numbers, Chris in fact headed the

team that developed ASC’s costs and

rates in our successful bid for the Air

Warfare Destroyer Program.

To pull the numbers together, Chris

worked with Macquarie Bank and ASC’s

shipbuilding capability partners Bath Iron

Works and Sinclair Knight Merz.

Now that we know what he can do,

we immediately put Chris in charge of

ASC’s internal audit function, where the

numbers certainly add up.

The Hobart Class AWD Program will

provide the timely and effi cient delivery

of an affordable, effective, fl exible and

sustainable air warfare destroyer capability

for the security of Australia.

SEA 4000 Hobart Class AWD Program

During the 2005/06 period, ASC entered

into the Phase 1D support contract for

the Hobart Class AWD Program. This

crucial first step involved mobilisation of

ASC’s shipbuilding team to support project

objectives, including transitioning the

company’s shipbuilding team to the AWD

Systems Centre in Felixstow, Adelaide.

In addition, members of ASC’s capability

partner, Bath Iron Works, were integrated

with ASC’s shipbuilding personnel as well

as the AWD Alliance to provide further

support for Phase 1D activities.

The AWD Systems Centre manages

the design schedule, budgets and work

breakdown structures for this complex

project and draws together defence and

industry participants to ensure effective and

efficient decision making, and provide a

focus for design-related activity.

As ASC now enters Phase 2 of the

Program, including undertaking parallel

design activities of the Gibbs & Cox

Evolved AWD Design and the Navantia

F100 Existing AWD Design (in accordance

with the 2003 Kinnaird Review), further

mobilisation of ASC’s shipbuilding

personnel to the AWD Systems Centre

will ensue.


24

Commitment


We are an output centric team, focused on the delivery of all of our commitments – cost, schedule, technical performance and quality – to the customer. We are also committed to maintaining an outstanding working relationship with our customers.

to customer outcomes

26

Corporate

ASC’s four corporate departments – Commercial and Legal, Finance, Human Resources and Change and Improvement provide specialised services to ASC’s functional business areas – Submarines, Shipbuilding and Design and Engineering.

Jon Moore (38)

Executive Manager Change and ImprovementBEng (Hons), CEng (UK)

Brian Archer (55)

General Manager Human ResourcesDip (Education)

Vladimir Malcik (51)

Chief Financial Offi cerMBA, Grad.Dip (Finance), B.Bus, FCPA ACIS

Tony Kuhlmann (40)

General Manager Commercial and LegalGeneral CounselCompany SecretaryBA, LLB, GDLP

27

Our PeopleHealth

The health and wellbeing of our people are

central to the success of our business and,

accordingly, understanding the potential

for health risks and establishing suitable

mitigation measures are integral to ASC

obtaining a lost time injury target of zero

across the company.

Healthy Plus Program

ASC’s Healthy Plus Program is a company-

wide initiative that was launched during

the year to inform staff on ways in which

they can take better care of themselves.

The initiative seeks to promote various

health concerns, including quit smoking,

blood donations, skin cancer awareness,

flu vaccinations, blood pressure /

cholesterol checks and diabetes checks,

and provide education and support for

dealing with them.

The initiative recognises that many health

issues not only have the potential to impact

on ASC’s safety performance, but can also

cause community issues and consequently

impact on our ability to contribute to the

development of our nation.

During the 2005/06 year, ASC provided

300 flu vaccinations to its staff, made

214 blood donations and assisted 25

employees to quit smoking, demonstrating

the success of the Healthy Plus Program.

Safety

The safety of our employees, contractors

and customers is an integral part of

our business. Our goal is to ensure all

employees and visitors are safe from injury

and risks to health while at work. Our lost

time injury target is zero.

To this end, ASC is seeking to create a

mindset and an environment where people

believe it is possible to work injury free

– regardless of what role they undertake or

in which program they work.

ASC frequently conducts internal audits to

ensure compliance with the Occupational

Health and Safety (Commonwealth

Employment) Act 1991 and AS.NZS

4801:2001 Occupational Health and Safety

Management Systems.

As part of our commitment to the

continuous improvement of ASC’s health

and safety performance, a hierarchy of

control measures are used to identify

hazards and manage risk exposure,

including the:

- elimination of hazards;

- substitution of hazardous materials

with less hazardous materials;

- application of engineering controls;

- application of administration

controls; and

- provision of personal protective

equipment.

ASC is confident that its standards and

associated systems are the right ones and

have directed efforts towards the effective

and consistent implementation of these

across the company.

David West

Project Manager – Submarine Equipment

You know those people who can adapt

and do anything? Well, David West is

one of those!

He joined us in 1998 as a weapon

systems engineer and was one of the

fi rst engineers to head up our Western

Australia operations in the provision of

in-service support for the Collins Class

submarines.

Eight years later, David returned to

South Australia as a project manager.

While in the West, David quickly learnt

that engineering skills represented just

one requirement in our business, you

also need project management skills.

Nothing makes David happier than

having a start and fi nish date, seeing the

outcome of a project and learning from

any mistakes made.

Today, David is the project manager for

change management in Maintenance

Engineering. It’s a position that

perfectly encapsulates his career at

ASC: improving himself by positively

responding to change.


28

Lost Time Injuries

A lost time injury is when an employee is

absent from work for a full shift as a result

of a work related injury.

Across its three facilities, ASC achieved a

consolidated Lost Time Injury Frequency

Rate (LTIFR) for 2005/06 of 3.24.

Independently, ASC’s Osborne facility,

Western Australia facility and Osborne

shipbuilding facility obtained 208, 729

and 819 respectively of continuous days

free of lost time injuries.

In recent years ASC has achieved a

reduction in its LTIFR by actively pursuing

improvement in this area.

Our People - continued

4

12

20

8

16

2

10

18

6

14

Rat

e pe

r m

illion

per

sonn

el h

ours

Jul-0

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Aug

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Sep

-05

Oct

-05

Nov

-05

Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr

-06

May

-06

Jun-

06

LTIFR/month

Moving Avg.

10

30

50

20

40

60

Rat

e pe

r m

illion

per

sonn

el h

ours

Jul-0

5

Aug

-05

Sep

-05

Oct

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Nov

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Dec

-05

Jan-

06

Feb-

06

Mar

-06

Apr

-06

May

-06

Jun-

06

MTIFR/month

Moving Avg.


Reported Incidents

During 2005/06, ASC reported four

notifiable incidents to Comcare under

section 68 of the Act. None of these

incidents were investigated by Comcare

and no notices were issued.

A strategy to eliminate such incidents in

the future has been considered in the

development of the 2006/07 Safety Action

Plan. The key objectives of this plan are to:

- improve the identification of hazards

and mitigate risks through the

development and implementation of

a Job Safety Analysis process for

hazardous activities;

- gain certification to AS.NZS 4801:2001

Occupational Health and Safety

Management systems; and

- develop and promote employee

health programs.

Implementation of a Behavioural Safety

Program is currently under consideration to

assist in achieving further improvement in

ASC’s safety performance.

University of Adelaide Review

As part of ASC’s continued safety

improvement program, The University of

Adelaide’s Occupational and Environmental

Hygiene Consulting were engaged during

2005/06 to review aspects of ASC’s current

safety program, including:

- employee perceptions of safety

management and ASC’s safety

culture;

- review of injury data for the last

five years to recommend

preventative measures; and

- review of key performance

indicators and benchmarking.

These reports provided some excellent

recommendations for improvement that

ASC is now in the process of implementing.

Mike HurdSpecialist Control Systems Engineer

Mike Hurd has travelled halfway

around the world to apply his skills

and knowledge at ASC.

The Specialist Control Systems Engineer

previously worked for Rolls-Royce in

Derby, England, where he helped provide

solutions to design and in-service

problems for the nuclear reactor control

and protection systems in British

submarines.

While there are some similarities between

the two jobs, Mike enjoys working at

ASC where he tackles problems with the

Collins Class’ hard-wired control systems

and sensors.

While you would think that going from

nuclear-powered submarines to diesel

electric engines is a big enough change,

Mike is now applying his skills across the

whole submarine platform rather than

just the engine.

30

Relentless

31

improvement and learningTo remain competitive we continually improve all aspects of the business, even those aspects that are already achieving world’s best practice. Our commitment to improve our processes, skills, knowledge, etc. is relentless. We are never too old or too good to learn or try new ideas. Innovation is prized.


32

- Certificate IV in Transport and Logistics;

- ASC’s Leadership Development

program;

- Masters in Military Systems

Integration (in association with

Defence Materiel Organisation’s Skilling

of Australia’s Defence Industry (SADI)

program, BAE Systems, Saab and the

University of South Australia);

- Masters in Marine Engineering (in

association with SADI and the

University of Adelaide); and

- Certified Project Managers program.

These programs, together with a full range

of professional development programs,

provide employees with the opportunity

to gain additional skills to maximise their

potential while also providing a clear career

path through management and technical

pursuits.

As a result of ASC’s 2004/05 company-

wide cultural survey ‘ASC Aloud’, ASC

developed and introduced a number of

programs to assist its people in developing

their potential even further, including:

- Certificate IV in Front Line Management;

- Certificate IV in Business Administration;

- Certificate IV in Project Management;

Knowledge

Development

Over the past 21 years, ASC’s people have

developed and applied a set of skills and

body of knowledge that is second to none

in Australia’s naval shipbuilding industry.


200

600

1000

400

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1200

Em

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Employee Numbers

Financial Year

SouthAustralia

5 employees in 1987 Western Australia

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Sponsored Programs


Personnel

Development

The people aspects of ASC’s operations

relate to how the company manages its

people and contribute to the economies

within which ASC operates. To support

employees, ASC has adopted a proactive

approach to protect and enhance their

value by:

- attracting and retaining high

quality staff;

- providing training and development

opportunities;

- setting out a framework for

performance management,

remuneration and incentives to

encourage a high performing culture

aligned with corporate objectives;

- ongoing career development and

succession planning at all levels within

the company; and

- recognising the importance of

work/life balance.

ASC’s most valuable asset is its people.

Many companies make this claim but, in

ASC’s case, it accurately reflects the reality

of its business.

Equal Opportunity

All employees are entitled to work

in an environment which is free from

discrimination, where discrimination

means denying an individual fair and equal

treatment in employment on grounds other

than those based on the requirements of

the job.

The merit principle will always form

the basis of recruitment, development

and promotion. Those with the abilities,

skills, qualifications and experience which

are required for a particular job will have an

equal opportunity of being considered for

the position.

ASC prohibits all kinds of discrimination

based on gender, sexuality, marital status,

pregnancy, race, age or physical or

intellectual impairment.

Employee Profile

ASC is committed to attracting, developing

and retaining high calibre employees

with the high-end knowledge and skills

necessary to drive business success and

growth into the future.

ASC commenced recruitment for the Air

Warfare Destroyer (AWD) Program during

2005/06, with thirty qualified personnel in

the areas of project management, planning,

support and controls, technical engineering

and design, estimating, quality, supply

chain, scheduling, infrastructure (shipyard)

development, administration, human

resources and finance, all recruited to kick-

start the program.

Recruitment will continue and heighten

inline with the various stages and

requirements of the AWD Program.

Non Through-Life Support Employees


Maintenance Engineering

Quality

Administration

Safety and Certification

Production

Shipbuilding

*not including contractors and apprentices

34

Industrial Relations

ASC successfully completed the

negotiations for a new Australian

Workplace Agreement during 2005/06.

The arrangement constitutes a three-year

collective union agreement for all employees

belonging to either the Australian

Manufacturing Workers Union, the

Communications, Electrical and Plumbing

Union or the Australian Workers Union.

This agreement was reached without any

industrial action, signifying successful

consultative processes between

management, the unions and

ASC’s workforce.

The workplace agreement for employees

associated with shipbuilding activities will

remain in force until 2007.

Graduates and Undergraduates

ASC continues to develop engineering

depth in the company through its

commitment to the graduate, undergraduate

and summer school programs.

During the year, 31 graduates participated

in ASC’s Graduate Program, which

introduces graduates to several different

disciplines within the business.

The two-year program aims to develop

skills, knowledge and professional interests

that will result in a rewarding and fulfilling

career path.

19 students participated in ASC’s

undergraduate and summer school

programs during the year. A placement in

one of these programs while studying at

university fosters a smooth progression into

ASC’s Graduate Program.

Apprenticeships

There were 28 apprentices involved in

ASC’s 2005/06 Apprenticeship Program,

specifically in the areas of fabrication,

mechanical and electrical areas. Upon

successful completion of the apprenticeship,

tradespeople are encouraged to further

their education towards diplomas and

advanced diplomas.

The combination of training and

development programs offered by ASC

ensures that the company is organically

growing its own skills to be available, as

needed, and to ensure there will be no skills

shortages in the future.

Employee Communication

ASC values its employees and as such

adopts numerous initiatives designed to

provide open communication opportunities

at all levels within the company, including:

- regular Strategic Update briefings;

- periodic Business Plan Review sessions; - publication of an employee

newsletter, ‘In Sight’; and

- frequent intranet and e-mail

updates.

In addition, ASC launched a new intranet

feedback mechanism during the year

enabling our employees to communicate

directly with the Managing Director. ‘Ask

Greg’ has been warmly received with both

management and staff noting benefits in

its adoption.


Andrew StevensCombat System Integration Manager

Andrew Stevens freely admits he never

planned to work at ASC for eight years,

let alone eighteen!

He joined a fledgling ASC in 1988 as a

guided weapons project engineer and

thought his work with us would be done

upon delivery of the first Collins Class

submarine in 1996.

Instead, Andrew has held down

a multitude of roles across many

departments and most recently played

a major part in our successful bid for the

Air Warfare Destroyer (AWD) Program.

Now, as our very own, home-grown

Combat System Integration Manager,

Andrew can’t wait to bring budding

engineers and designers into the fold

and offer them similar opportunities in the

AWD Program not unlike those he was

afforded as a young engineer in 1988.


ASC’s objectives for environmental

management are outlined in the company’s

Environmental Policy, which states that

we will:

- promote environmental awareness

amongst employees to demonstrate

social responsibility;

- implement systems of work to reduce

and prevent pollution;

- integrate environmental aspects into

risk assessments within ASC;

- conserve national resources and

promote energy conservation;

- establish protocols that incorporate

environmental aspects into the

acquisition of materials in the supply

chain process;

- comply with legal requirements;

- implement and promote practical and

effective waste management practices;

and

- continually improve ASC’s

environmental performance.

Environmental Incidents

ASC actively recognises its obligation to

comply with the relevant Environmental

Protection and Conservation Acts (Acts).

The company actively records and

reports any breaches of the Acts to the

Environmental Protection Authority.

During the 2005/06 reporting period, there

were no environmental incidents at any of

ASC’s facilities.

Environmental Management System

A preliminary analysis of ASC’s processes

and procedures in regard to environmental

monitoring and management was

undertaken during the year.

While the report identified a number of

positive initiatives implemented by ASC, it

also recommended an upgrade of systems

to achieve full compliance at the ISO

14000 level.

ASC’s aim then, in the 2006/07 period, is

to achieve an ISO 14000 series compliant

Environmental Management System.

Environmental Licence

ASC currently has a licence with the

Environmental Protection Agency in

South Australia for Abrasive Blasting and

Maritime Construction; including the

discharge of storm water, river-to-river

cooling water and low level Total Petroleum

Hydrocarbons contaminated water into

the Port River.

Jennifer Benson

Project Manager

Jennifer Benson’s career has gone from

being high in the sky to deep under

water – but she wouldn’t have it any

other way!

Trained as an aeronautical engineer,

Jen worked with aircraft and ships at

BAE and ADI respectively, but it was the

Collins Class submarines that attracted

Jen to the role of senior project manager

at ASC.

Jen is based in Western Australia, where

she has powered her way through

HMAS Sheean’s intermediate docking

and HMAS Rankin’s mid-cycle docking,

before becoming a project manager for

HMAS Collins.

With a Masters in Project Management

also under her belt, we have no qualms

about Jen applying her skills to manage

all aspects of major maintenance

projects.

Environment

36

Safety, Integrity for


Our actions can critically impact the safety of customers, colleagues and ourselves. We take this responsibility seriously at all times and never compromise safety. Successful teamwork and outstanding customer, supplier and internal relationships all require integrity and a willingness to consider the other party’s perspective.

and Empathy Others in all Endeavours

38

Financial Report

39 Directors’ Report

42 Independent Audit Report

44 Directors’ Declaration

45 Auditor’s Independence Declaration

46 Income Statements

47 Statements of Recognised Income and Expense

48 Balance Sheets

49 Statements of Cash Flows

50 Notes To and Forming Part of the Financial Statements


Directors’ ReportFor the year ended 30 June 2006

The Directors present their report, together with the consolidated fi nancial report of the consolidated entity, being ASC Pty Ltd (the Company) and its controlled

entities, for the year ended 30 June 2006 and the auditors’ report thereon.

Directors

The Directors of the company at any time during or since the end of the fi nancial year are:

John Barry Prescott AC Appointed 3/11/00 Charles Neville Hervey Bagot Appointed 3/11/00

Graeme Richard Bulmer Appointed 10/11/00 General (Rtd) John Stuart Baker AC DSM Appointed 1/7/02

Stephen Elliott Young Appointed 1/7/02 Gregory Roy Tunny Appointed 11/10/04

Resigned 30/6/06

Principal Activities

The principal activities of the consolidated entity during the course of the fi nancial year ended 30 June 2006 included:

Submarine:

Maintenance, design development, engineering and upgrading of six submarines for the Royal Australian Navy (RAN). These activities were undertaken for the

Collins Class submarines under the Through-Life Support Contract. This contract is of fi fteen years duration with extension options for a further ten year period.

Air Warfare Destroyer (AWD):

On 31 May 2005, Senator Robert Hill, then Minister for Defence, announced ASC as the preferred shipbuilder for Australia’s Air Warfare Destroyer (AWD)

Program. The decision recognised ASC’s expertise, highly-skilled personnel and proven track record in delivering highly complex naval platforms. ASC AWD

Shipbuilder Pty Ltd entered into a contract with the Commonwealth of Australia represented by Defence Materiel Organisation for the provision of services in

respect of this program.

Consolidated Result

The consolidated profi t of the consolidated entity for the fi nancial year attributable to the shareholders of ASC Pty Ltd was $18,487,000 after provision for income

tax expense of $7,835,000.

Review of Operations

Submarine activities:

The Company is currently operating in the third year of the Collins Class Submarine Through-Life Support Contract. All other submarine related contracts will

either be completed or converted to the Through-Life Support Contract.

Air Warfare Destroyer (AWD) activities:

In the fi nancial year ended 30 June 2006, ASC commenced implementation of the various shipbuilding strategic plans to support the program, thereby incurring

signifi cant non-reimbursable costs. These included supporting the AWD Alliance with initial ship design activities, planning for infrastructure development, and

recruiting and training project personnel. The objective is that these activities will lead to formal endorsement by the Australian Government for the full project

implementation budget and schedule in 2007.

Dividends

The Directors have declared a fully franked fi nal dividend of $6,350,000, compared with $7,200,000 for the 2004/05 fi nancial year which was paid on 28 October

2005. The dividend will be payable at a date yet to be determined.

The fi nal dividend is in addition to the interim fully franked dividend of $4,750,000 paid on 24 February 2006, compared with $2,500,000 in the 2004/05

fi nancial year.

The 2005/06 total dividend represents a distribution to the shareholder of $11,100,000, compared with $9,700,000 in the 2004/05

fi nancial year.

40

State of Affairs

In the opinion of the Directors there were no signifi cant changes in the state of affairs of the consolidated entity that occurred during the fi nancial year

under review.

Events Subsequent to Balance Date

There are no other matters that have arisen between the end of the fi nancial year and the date of this report, including any item, transaction or event of a

material and unusual nature likely, in the opinion of the Directors of the Company, to affect signifi cantly the operations of the economic entity, the results of

those operations, or the state of affairs of the consolidated entity, in subsequent fi nancial periods.

Likely Developments

It is the Commonwealth of Australia’s stated intent to privatise the Company at some point in the future.

ASC Pty Ltd is a Government Business Enterprise under the Commonwealth Authorities and the Companies Act, which require the Company to operate

effi ciently, earn a commercial rate of return and observe a more standardised and transparent reporting framework. Strict procedures governing the

relationship between ASC Pty Ltd, the Department of Defence and the Department of Finance and Administration have been put in place.

Directors’ Benefi ts

Since the end of the previous fi nancial year no Director of the Company has received or become entitled to receive any benefi t (other than reimbursement of

expenses and the aggregate amount of remuneration received or due and receivable by Directors shown in the consolidated accounts) because of a

contract made by the Company, its controlled entities or a related body corporate with the Director or with a fi rm of which the Director is a member, or

with an entity in which the Director has a substantial interest.

Indemnifi cation and Insurance of Offi cers

Indemnifi cation

The Company has entered into agreements by which current and previous Directors and Offi cers of the Company are indemnifi ed out of the property of the

Company against all liabilities to another person (other than the Company or a related body corporate) that may arise in their capacity as Directors and Offi cers of

the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. The agreements stipulate that the Company

will meet, to the extent permitted by law, the full amount of any such liabilities, including costs and expenses.

Insurance Premiums

Since the end of the previous fi nancial year the Company, its Directors and Offi cers have paid insurance premiums in respect of Directors’ and Offi cers’ liability

insurance contracts for current and former Directors and Offi cers, including Executive Offi cers of the Company and Directors, Executive Offi cers and Secretaries

of its controlled entities. The insurance premiums cover Directors and Offi cers for actual losses incurred in their capacity as Directors and Offi cers of the

company, which are not indemnifi ed by the Company and which the Director or Offi cer becomes legally obligated to pay on account of certain claims made

against him/her individually or otherwise. The terms of insurance policy prohibit disclosure of the amounts of the premium payable.

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

The Auditor’s Independence Declaration is set out on page 31 and forms part of the Directors’ Report for the year ended 30 June 2006.

Rounding Off

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in this report and the

accompanying fi nancial statements have been rounded off to the nearest thousand dollars unless otherwise stated.

Directors’ Report - continued

For the year ended 30 June 2006


Dated at Adelaide this 8th day of August 2006.

Signed in accordance with a resolution of Directors:

John B Prescott AC Chairman

Gregory R Tunny Director

42

Independent Audit Report

To the members of ASC Pty Ltd

Scope

The fi nancial report and directors’ responsibility

The fi nancial report comprises:

- Directors’ Declaration;

- Statements of Income, Recognised Income and Expense, Balance Sheet and Statements of Cash Flows; and

- Notes to and forming part of the Financial Report for both ASC Pty Ltd and the consolidated entity, for the year ended 30 June 2006. The consolidated entity

comprises both the Company and the entities it controlled during that year.

The Directors of the company are responsible for preparing a fi nancial report that gives a true and fair view of the fi nancial position and performance of the

company and the consolidated entity, and that complies with the Corporations Act 2001 and Accounting Standards and other mandatory fi nancial reporting

requirements in Australia. The Directors of the company are also responsible for the maintenance of adequate accounting records and internal controls that are

designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the fi nancial report.

Audit Approach

I have conducted an independent audit of the fi nancial report in order to express an opinion on it to the members of the company. My audit has been conducted

in accordance with the Australian National Audit Offi ce Auditing Standards, which incorporate the Australian Auditing and Assurance Standards, in order to

provide reasonable assurance as to whether the fi nancial report is free of material misstatement. The nature of an audit is infl uenced by factors such as the use of

professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive, rather than conclusive, evidence. Therefore,

an audit cannot guarantee that all material misstatements have been detected.

While the effectiveness of management’s internal controls over fi nancial reporting was considered when determining the nature and extent of audit procedures,

the audit was not designed to provide assurance on internal controls.

I have performed procedures to assess whether, in all material respects, the fi nancial report presents fairly, in accordance with the Corporations Act 2001 and

Accounting Standards and other mandatory fi nancial reporting requirements in Australia, a view which is consistent with my understanding of ASC Pty Ltd’s and

the consolidated entity’s fi nancial position, and of its fi nancial performance and cash fl ows.

The audit opinion is formed on the basis of these procedures, which included:

- examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the fi nancial report; and

- assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of signifi cant accounting estimates made

by management.

Independence

In conducting my audit, I have complied with the independence requirements of the Corporations Act 2001.

GPO Box 707 CANBERRA ACT 2601

Centenary House 19 National Circuit

BARTON ACT

Phone (02) 6203 7300 Fax (02) 6203 7777


Audit Opinion

In my opinion, the fi nancial report of the ASC Pty Ltd and the consolidated entity is in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of the ASC Pty Ltd’s and the consolidated entity’s fi nancial position as at 30 June 2006 and of its performance for the

year ended on that date; and

(b) complying with Accounting Standards and other mandatory fi nancial reporting requirements in Australia and the Corporations Regulations 2001.

Australian National Audit Offi ce

Michael WhiteExecutive Director

Delegate of the Auditor-General

Canberra

10 August 2006

44

In the opinion of the Directors of ASC Pty Ltd:

(a) the fi nancial statements and accompanying notes set out on pages 46 to 87 are in accordance with Note 1 of the fi nancial statements (pages 50 to 58)

(Accounts) and comply with accounting standards applicable under the Corporations Act 2001;

(b) the Accounts give a true and fair view of the fi nancial position and performance of the Company and its controlled entities for the fi nancial period ending

30 June 2006;

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

(d) the Accounts are in accordance with the Corporations Act 2001 including sections 296 and 297.

Dated at Adelaide this 8th day of August 2006.

Signed in accordance with a resolution of the Directors:

John B Prescott AC Chairman

Gregory R Tunny Director

Directors’ DeclarationFor the year ended 30 June 2006


In relation to our audit of the fi nancial report of the ASC Pty Ltd and consolidated entity for the year ended 30 June 2006, to the best of my knowledge and belief,

there have been:

(i) no contraventions of the auditor independence requirements of the Corporations Act 2001; and

(ii) no contravention of any applicable code of professional conduct.

Australian National Audit Offi ce

Michael WhiteExecutive Director

Delegate of the Auditor-General

10 August 2006

Auditor’s Independence Declaration to the Directors of ASC Pty Ltd and consolidated entity

GPO Box 707 CANBERRA ACT 2601

Centenary House 19 National Circuit

BARTON ACT

Phone (02) 6203 7300 Fax (02) 6203 7777

46

CONSOLIDATED THE COMPANY

Jun-06 Jun-05 Jun-06 Jun-05

Note $’000 $’000 $’000 $’000

Revenue from rendering of services 3 254,675 217,042 237,891 210,991

Financial Income 3 5,869 5,580 6,156 5,576

Other income 3 381 6,648 137 6,401

Total revenue 260,925 229,270 244,184 222,968

Expenses

Materials and subcontractors (101,061 ) (75,330 ) (85,891 ) (64,278 )

Labour (101,937 ) (92,644 ) (99,289 ) (89,980 )

Labour recruitment and relocation (1,810 ) (1,437 ) (1,649 ) (1,349 )

Depreciation and amortisation 4 (3,731 ) (3,363 ) (3,381 ) (2,968 )

Professional fees (3,343 ) (4,592 ) (1,893 ) (4,192 )

Repairs and maintenance (4,737 ) (3,106 ) (4,489 ) (2,960 )

Utilities expense (2,236 ) (2,273 ) (2,005 ) (2,013 )

Finance costs 4 (70 ) (36 ) (29 ) (30 )

Insurance (2,487 ) (1,966 ) (1,986 ) (1,671 )

Operating lease (1,973 ) (1,847 ) (1,775 ) (1,702 )

Production consumables and supplies (1,076 ) (1,108 ) (1,046 ) (1,038 )

Pension costs 739 (109 ) 739 (109 )

Rental of offi ce and buildings (268 ) (69 ) (970 ) (727 )

Security expenses (751 ) (713 ) (530 ) (491 )

Training expenses (1,640 ) (817 ) (1,558 ) (817 )

Travelling expenses (1,362 ) (1,261 ) (1,351 ) (1,227 )

Offi ce expenses (1,596 ) (1,152 ) (1,559 ) (1,037 )

Service agreement costs - (6,324 ) - (6,324 )

Self Insured Workers Compensation (2,013 ) (3,023 ) (2,013 ) (3,023 )

Warranty (176 ) (4,160 ) (176 ) (4,160 )

Impairment on non current assets - (612 ) (2,600 ) -

Other expenses (3,075 ) (2,845 ) (2,793 ) (1,160 )

Total expenses (234,603 ) (208,787 ) (216,244 ) (191,256 )

Profi t before tax 26,322 20,483 27,940 31,712

Income tax (expense)/benefi t 6(a) (7,835 ) (4,406 ) (8,283 ) (8,696 )

Profi t after tax 18,487 16,077 19,657 23,016

The income statement is to be read in conjunction with the notes to the fi nancial statements set out on pages 50 to 87.

Income StatementsFor the year ended 30 June 2006




Note $’000 $’000 $’000 $’000

Actuarial gains (losses) on defi ned benefi t plans after tax (923 ) 698 (923 ) 698

Net income recognised directly in equity (923 ) 698 (923 ) 698

Profi t for the year 18,487 16,077 19,657 23,016

Total recognised income and expense for the year 17,564 16,775 18,734 23,714

Effect of change in accounting policy -

fi nancial instruments 1(c) (854 ) - (995 ) -

Statements of Recognised Income and ExpenseFor the year ended 30 June 2006

This Statement of changes in equity is to be read in conjunction with the notes to the fi nancial statements set out in pages 50 to 87.

48



Note $’000 $’000 $’000 $’000

ASSETS

CURRENT ASSETS

Cash assets 8 6,455 3,366 6,454 3,337

Receivables 9 48,800 59,702 48,357 59,511

Other fi nancial assets 11 33,373 48,430 33,373 48,430

Inventories 10 9,637 13,002 9,637 12,931

Other 13 483 715 417 565

TOTAL CURRENT ASSETS 98,748 125,215 98,238 124,774

NON CURRENT ASSETS

Receivables 9 24,565 27,544 30,361 27,544

Investments accounted for using the equity method 12 5 5 5 5

Other fi nancial assets 11 47,372 57,556 57,772 70,556

Property, plant and equipment 14 75,257 73,567 67,778 65,699

TOTAL NON CURRENT ASSETS 147,199 158,672 155,916 163,804

TOTAL ASSETS 245,947 283,887 254,154 288,578

LIABILITIES

CURRENT LIABILITIES

Bank overdraft 8 2,019 - - -

Payables 15 57,316 95,585 58,308 92,421

Non interest-bearing liabilities 16 5 360 2,806 1,931

Current income tax payable 6(b) 2,474 5,948 2,474 5,948

Provisions 17 30,599 36,396 25,731 31,719

TOTAL CURRENT LIABILITIES 92,413 138,289 89,319 132,019

NON CURRENT LIABILITIES

Non interest-bearing liabilities 16 3 360 2 160

Deferred tax liabilities 6(d) 26,315 28,433 25,717 28,591

Provisions 17 13,022 9,473 12,915 9,444

TOTAL NON CURRENT LIABILITIES 39,340 38,266 38,634 38,195

TOTAL LIABILITIES 131,753 176,555 127,953 170,214

NET ASSETS 114,194 107,332 126,201 118,364

EQUITY

Issued capital 18 10,000 10,000 10,000 10,000

Reserves 19 31,014 29,762 28,067 26,869

Retained earnings 20 73,180 67,570 88,134 81,495

TOTAL EQUITY 114,194 107,332 126,201 118,364

The Balance Sheet is to be read in conjunction with the notes to the fi nancial statements set out on pages 50 to 87.

Balance SheetsAs at 30 June 2006




Note $’000 $’000 $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts in the course of operations 287,257 230,414 270,910 227,277

Cash payments in the course of operations (289,271 ) (227,958 ) (264,494 ) (215,537 )

Income taxes refunded/(paid) 6(b) (13,452 ) (6,546 ) (13,452 ) (6,546 )

Net cash provided by/(used in) operating activities 33(b) (15,466 ) (4,090 ) (7,036 ) 5,194

CASH FLOWS FROM INVESTING ACTIVITIES

Interest received 4,820 6,599 5,109 6,596

Leverage lease income 2,312 1,960 2,312 1,960

Proceeds from disposal of non current assets 119 300 1 31

(Increase)/decrease in invested funds 33(c) 24,637 2,538 24,637 2,538

Payments for property, plant and equipment (3,378 ) (3,641 ) (3,497 ) (3,610 )

Loan (to)/from controlled entity - - (6,458 ) (9,074)

Loan (to)/from associates - 404 - 406

Payments for other loans - (41 ) - -

Investment in associates - 42 - 42

Net cash used in investing activities 28,510 8,161 22,104 (1,111 )

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (11,950 ) (7,500 ) (11,950 ) (7,500 )

Interest paid (24 ) - (1 ) -

Net cash used in fi nancing activities (11,974 ) (7,500 ) (11,951 ) (7,500 )

Net increase/(decrease) in cash held 1,070 (3,429 ) 3,117 (3,417 )

Cash at the beginning of the fi nancial year 3,366 6,795 3,337 6,754

Cash at the end of the fi nancial year 33(a) 4,436 3,366 6,454 3,337

The statements of cash fl ows are to be read in conjunction with the notes to and forming part of the fi nancial statements set out on pages 50 to 87.

Statements of Cash FlowsFor the year ended 30 June 2006

50

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

ASC Pty Ltd is a company domiciled in Australia. The consolidated fi nancial report of the Company for the year ended 30 June 2006

comprises the Company and its subsidiaries (together referred to as the “consolidated entity”) and the consolidated entities interest

in associates.

The fi nancial report was authorised for issue by the directors on 8 August 2006.

(a) Statement of Compliance

The fi nancial report is a general purpose fi nancial report which has been prepared in accordance with Australian Accounting Standards (‘AASBs’)

adopted by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. International Financial Reporting Standards

(‘IFRSs’) form the basis of Australian Accounting Standards (‘AASBs’) adopted by the AASB, and for the purpose of this report are called Australian

equivalents to IFRS (‘AIFRS’) to distinguish from previous Australian GAAP. The fi nancial reports of the consolidated entity and the Company also

comply with IFRSs and interpretations adopted by the International Accounting Standards Board.

This is the consolidated entity’s fi rst fi nancial report prepared in accordance with Australian Accounting Standards, being AIFRS and AASB 1 First Time

Adoption of Australian equivalent to International Financial Reporting Standards has been applied. An explanation of how the transition to AIFRS has

affected the reported fi nancial position, fi nancial performance and cash fl ows of the consolidated entity and the Company is provided at Note 32.

(b) Basis of Preparation

The fi nancial report is presented in Australian dollars. The entity has elected to adopt early the following accounting standards and amendments:

- AASB 119 Employee Benefi ts (December 2004)

- AASB 2004-3 Amendments to Australian Accounting Standards (December 2004) amending AASB 1 First time Adoption of Australian Equivalents

to International Financial Reporting Standards (July 2004), AASB 101 Presentation of Financial Statements and AASB 124 Related Party Disclosures

- UIG 4 Determining whether an Arrangement contains a Lease.

Issued standards not adopted early

The following standards and amendments were available for early adoption but have not been applied by the consolidated entity in these fi nancial statements:

- AASB 7 Financial instruments: Disclosure (August 2005) replacing the presentation requirements of fi nancial instruments in AASB 132. AASB 7 is

applicable for annual reporting periods beginning on or after 1 January 2007.

- AASB 2005-9 Amendments to Australian Accounting Standards (September 2005) requires that liabilities arising from the issue of fi nancial

guarantee contracts are recognised in the balance sheet. AASB 2005-9 is applicable for annual reporting periods beginning on or after 1 January 2006.

- AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments:

Disclosures and Presentation, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 117 Leases, AASB 133 Earnings per

Share, AASB 139 Financial Instruments: Recognition and Measurement, AASB 1 First- time Adoption of Australian Equivalents to International Financial

Reporting Standards, AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts, arising from the

release of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007.

The consolidated entity plans to adopt AASB 7, AASB 2005-9 and AASB 2005-10 in the 2007 fi nancial year.

The initial application of AASB 7 and AASB 2005-10 is not expected to have an impact on the fi nancial results of the Company and the consolidated

entity as the standard and the amendment are concerned only with disclosures.

The initial application of AASB 2005-9 could have an impact on the fi nancial results of the Company and the consolidated entity as the amendment

could result in liabilities being recognised for fi nancial guarantee contracts that have been provided by the Company. However, the quantifi cation of the

impact is not known or reasonably estimable in the current fi nancial year as an exercise to quantify the fi nancial impact has not been undertaken by the

Company to date.

Notes To and Forming Part of the Financial Statements For the year ended 30 June 2006


The fi nancial report is prepared on a historical costs basis except that the following assets and liabilities are stated at their fair value: land and buildings,

pension assets and all fi nancial instruments.

The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 (updated by CO 05/641 effective 28 July 2005 and CO 06/51

effective 31 January 2006) and in accordance with that Class Order, amounts in the fi nancial report and Directors’ report have been rounded to the

nearest thousand dollars, unless otherwise stated.

The preparation of the fi nancial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and

assumptions that affect the application of policies and reported amounts of assets and liabilities; income and expenses. The estimates and associated

assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of

which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results

may differ from these estimates. These accounting policies have been consistently applied by each entity in the consolidated entity.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which

the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both the current

future periods.

Judgements made by management in the application of the Australian Accounting Standards that have a signifi cant effect on the fi nancial report and

estimates with a signifi cant risk or material adjustment in the next year are discussed in Note 2.

The accounting policies set out below have been consistently applied to all periods presented in the consolidated fi nancial report and in preparing

an opening AIFRS balance sheet at 1 July 2004 for the purposes of transition to Australian Accounting Standards - AIRFS.

The accounting policies have been applied consistently by all entities within the consolidated entity.

(c) Change in Accounting Policies

Adoption of AASB 132 and AASB 139 from 1 July 2005

In the current fi nancial year the consolidated entity adopted AASB 132 Financial Instruments: Disclosure and Presentation and AASB 139 Financial

Instruments: Recognition and Measurement. This change in accounting policy has been adopted in accordance with the transition date rules contained

in AASB 1, which does not require the restatement of comparative information for fi nancial instruments within the scope of AASB 132 and AASB 139. Any

required adjustments to the carrying value of fi nancial instruments at 1 July 2005 have been posted to retained earnings, as described below.

On adoption of AASB 132 and AASB 139 at 1 July 2005, the consolidated entity is required to carry long-term receivables and payables at amortised

cost (previously carried at historical cost).

Leveraged Lease Receivable

With respect to the leveraged lease receivable, the amount of the receivable is calculated as the present value of estimated cash fl ows, discounted at

the effective interest rate. The impacts of the change in measurement of the leveraged lease receivable on the consolidated entity and the Company are

a reduction in the leveraged lease receivable of $1,581,000 at 1 July 2005, with an associated charge to retained earnings at that time.

Non-interest bearing Loans Payable

With respect to the 99 year interest-free government loans, the amount of the loans is calculated as the present value of estimated cash fl ows, discounted at

a market interest rate applicable to similar loans. The impacts of the change in measurement of the loans payable on the consolidated entity and the

Company are a reduction in the loan payable of $360,000 and $160,000 respectively at 1 July 2005, with associated increases to retained earnings at

that time.

52

Notes To and Forming Part of the Financial Statements - continued For the year ended 30 June 2006

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Principles of Consolidation

Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the fi nancial and

operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights that presently are exercisable or

convertible are taken into account. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from the date that control

commences until the date that control ceases.

Investments in subsidiaries are carried at their cost of acquisition in the Company’s fi nancial statements.

Associates

Associates are those entities in which the consolidated entity has signifi cant infl uence, but not control, over the fi nancial and operating policies. The

consolidated fi nancial statements includes the consolidated entity’s share of the total recognised gains and losses of associates on an equity accounted

basis, from the date that signifi cant infl uence commences until the date that signifi cant infl uence ceases. When the consolidated entity’s share of losses

exceeds its interest in an associate, the consolidated entity’s carrying amount is reduced to nil and recognition of further losses is discontinued except to

the extent that the consolidated entity has incurred legal or constructive obligations or made payments on behalf of an associate.

In the Company’s fi nancial statements, investments in associates are carried at fair value, with resulting revaluation gains and losses recognised in equity.

Transactions eliminated on consolidation

Intra-group balances and unrealised gains or losses arising from intra-group transactions, are eliminated in preparing the consolidated fi nancial statements.

(e) Revenue Recognition

Rendering of Services

Revenue from services rendered is recognised in the Income Statement in proportion to the stage of completion of the transaction at the balance sheet

date. The stage of completion is measured either by the cost of work completed and estimated total costs at the completion of the contract, or by surveys

of work performed whichever one is more appropriate depending on the nature of the contract. Where the outcome of a contract cannot be reliably

estimated, revenue is only recognised to the extent of the contract costs incurred that it is probable will be recoverable.

Revenue for incentives is recognised at the time of customer acceptance.

Interest Income

Interest income is recognised as it accrues, using the effective interest method.

Other Revenue

The revenue recognition policy for work in progress for revenue generating activities is described in Accounting Policy Note 1(f) below.

(f) Work in Progress for Revenue Generating Activities

Valuation

Work in progress is carried at cost, plus profi t recognised to date based on the value of work completed, less contract billings due and less provision for

foreseeable losses. Estimated costs at completion include allowances which recognise the inherent risks associated with a long-term contract of this

nature. Provision for the total loss on a contract is made as soon as the loss is identifi ed.

Cost includes all costs directly related to specifi c contracts and those which can be attributed to contract activity in general and which can be allocated to

specifi c contracts on a reasonable basis. Such costs include administration overhead costs which are directly related to the Company’s contract with the

Commonwealth of Australia.

Tendering costs on contracts are expensed as incurred.


Recognition of Revenue

Contract billings due and receivable to balance date are recorded on the basis of claims approved, and claims submitted for approval, by the Commonwealth

of Australia, in relation to contract costs incurred by the Company.

Revenue arising from the performance of the contract is recognised in the Income Statement on the basis of the stage of completion of the contract. The

stage of completion is measured either by the cost of work completed and estimated total costs at the completion of the contract, or by surveys of work

performed, whichever one is more appropriate depending on the nature of the contract. Recognition of revenue arising from progress billings received in

advance of the performance of contract activities has been deferred and included in the measurement of work in progress.

Where the outcome of a contract cannot be estimated reliably, revenue is recognised only to the extent of contract costs incurred that it is probable will

be recoverable.

(g) Foreign Currency

Transactions

Foreign currency transactions are translated to Australian currency at the rate of exchange ruling at the date of the transaction. Monetary assets and liabilities

denominated in foreign currencies at balance date are translated at the rates of exchange ruling on that date.

The incurrence of liabilities denominated in foreign currencies is matched by the recognition of contract claims receivable denominated in the same

foreign currencies.

Foreign exchange differences arising in respect of foreign currency items are included in the measurement of the contract billings and work in progress costs.

(h) Property, Plant and Equipment

Valuation of Land and Buildings

Land and buildings are carried at fair value.

Valuation of Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and impairment losses.

Costs incurred on plant and equipment are capitalised when it is probable that future economic benefi ts, in excess of the originally assessed performance

of the asset will fl ow to the consolidated entity in future years. Where these costs represent separate components of a complex asset they are accounted

for as separate assets and are separately depreciated over their useful lives.

Depreciation

Depreciation is charged to the Income Statement on a straight line basis over the estimated useful lives of each part of an item of property, plant and

equipment. Land is not depreciated.

The depreciation rates used for each class of asset are as follows:

- Buildings 2.5 – 13.0%

- Plant and Equipment 9.0 – 40.0%

Assets are depreciated from the date of acquisition or, in respect of internally constructed assets, from the time an asset is completed

and held ready for use.

54



(h) Property, Plant and Equipment (continued)

Leased Plant and Equipment

Leases of plant and equipment under which the Company or its controlled entities assume substantially all the risks and benefi ts of ownership are

classifi ed as fi nance leases. Other leases are classifi ed as operating leases.

Minimum lease payments are apportioned between the fi nance charge and the reduction in the outstanding liability. The fi nance charge is allocated to

each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Payments made under operating

leases are charged against profi ts in equal instalments over the accounting periods covered by the lease term, except where an alternative basis is more

representable of the pattern of benefi ts to be derived from the leased property.

(i) Taxation

Tax Consolidation

The Company is the Head entity in the tax-consolidated group comprising all the Australian wholly-owned subsidiaries set out in Note 30. The implementation

date for the tax-consolidated group is 1 July 2002.

The Head entity recognises all of the current tax assets and liabilities of the tax consolidated group (after elimination of intra-group transactions). Current tax

liabilities and assets of wholly owned subsidiaries are recorded in “other trade payables/receivables” to refl ect that the transactions that are giving rise to the

tax are in the subsidiaries.

Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of tax- consolidated group

are recognised in the separate fi nancial statements of the members of the tax-consolidated group using the ‘separate taxpayer within group’ approach

by reference to the carrying amounts of assets and liabilities in the separate fi nancial statements of each entity and the tax values applying under tax

consolidation.

The tax-consolidated group has entered into a tax sharing agreement that requires wholly-owned subsidiaries to make contributions to the Head entity for

100% of current tax assets and liabilities arising from external transactions. The contribution is recorded as an inter company receivable or payable.

Accounting for income tax

Income tax on profi t or loss for the year comprises current and deferred tax. Income tax is recognised in the Income Statement except to the extent that it

relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on income tax for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any

adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts or assets and

liabilities for fi nancial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected

manner of realisation or settlement of the carrying amounts of assets and liabilities, using tax rates enacted or substantively enacted at balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts will be available against which the asset can be utilised.

Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefi t will be realised.

(j) Employee Benefi ts

Wages, Salaries and Annual Leave

Liabilities for employee benefi ts for wages, salaries and annual leave expected to be settled within 12 months of the year-end represent present obligations

resulting from employees’ services provided to reporting date, are calculated at undiscounted amounts based on remuneration wage and salary rates

expected to be paid at reporting date including related on-costs.


Long Service Leave

The provision for employee benefi ts for long service leave represents the present value of the estimated future cash outfl ows to be made resulting from

employees’ services provided to reporting date.

The provision is calculated using expected future increases in wage and salary rates including related on-costs.

Defi ned Contribution Plan

Obligations for contributions to the defi ned contribution plan are recognised as expenses in the Income Statement as incurred.

Defi ned Benefi t Plans

The consolidated entity’s net obligation in respect of the defi ned benefi t superannuation plan is calculated by estimating the amount of future benefi t that

employees have earned in return for their service in the current and prior periods; that benefi t is discounted to determine its present value, and the fair value

of any plan assets is deducted.

The discount rate is the rate attached to AAA credit rated bonds that have maturity dates which most closely match the terms of maturity of the related

liabilities. Where AAA credit rated bonds are not available, and specifi cally for all Australian Dollar denominated obligations, the discount rate is the rate

attached to National Government Bonds at the reporting date which most closely match the terms of maturity of the related liabilities. When the employee

entitlements under the plan are improved, the proportion of the increased benefi t relating to past service by employees is recognised as an expense in the

Income Statement on a straight line basis over the average period until the benefi ts become vested. To the extent that the benefi ts vest immediately, the

expense is recognised immediately in the Income Statement. Where the calculation results in a net benefi t to the consolidated entity, the recognised asset

is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions

in future contributions to the plan.

Past service cost is the increase in present value of the defi ned benefi t obligation for employee services in prior periods, resulting in the current period from

the introduction of, or changes to, post employment benefi ts or other long-term employee benefi ts. Past service costs may either be positive (where benefi ts

are introduced or improved) or negative (where existing benefi ts are reduced).

All actuarial gains and losses as at 1 July 2004, the date of transition to AIFRSs, were recognised to retained earnings and the actuarial gains and losses that

arise subsequent to the transition date are recognised directly to retained earnings.

(k) Receivables

Trade and other receivables are stated at cost, less impairment losses.

(l) Payables

Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to the Company or consolidated entity.

Trade and other payables are stated at amortised cost. Trade payables are non-interest bearing and are normally settled on 30-day terms.

(m) Goods and Services Tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not

recoverable from the Australian Tax Offi ce (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of

an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Balance Sheet.

Cash fl ows are included in the Statement of Cash Flows on a gross basis. The GST components of cash fl ows arising from investing and fi nancing

activities which are recoverable from, or payable to, the ATO are classifi ed as operating cash fl ows.

56



(n) Provisions

A provision is recognised in the Balance Sheet when the consolidated entity has a present legal or constructive obligation as a result of a past event, and it

is probable that an outfl ow of economic benefi ts will be required to settle the obligation. If the effect is material, provisions are determined by discounting the

expected future cash fl ows at a pre-tax rate that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to

the liability.

Self Insurance

The company self insures for risks associated with workers’ compensation. Outstanding claims are recognised when an incident occurs that may give rise to

a claim and are measured at the cost that the entity expects to incur in settling the claims, discounted using a rate that refl ects current market assessments of

the time value of money and risks specifi c to the liability.

When some or all of the economic benefi t required to settle a provision are expected to be recovered from a third party, the recovery receivable is recognised

as an asset when it is probable that the recovery will be received and is measured on a basis consistent with the measurement of the related provision.

In the Income Statement, the expense recognised in respect of a provision is presented net of the recovery.

In the Balance Sheet, the provision is recognised net of the recovery receivable when the entity:

- has a legally recognised right to set-off the recovery receivable and the provision; and

- intends to settle on a net basis, or to realise the asset and settle the provision simultaneously.

Warranty

The estimate for the warranty obligation for design, engineering and maintenance activities is based on engineering assessments as to probable repair

or restoration costs of the products arising from warranty claims. Provision for warranty is made for claims received and expected based on past sales

and historical claim rates. Signifi cant uncertainty relates to estimates for contracting activities as the estimates depend on circumstances particular to

each contract.

Warranty funds received from the Commonwealth of Australia for warranty are recognised directly to the warranty provision.

(o) Inventories

Inventories are measured at the lower of cost or net realisable value. Net realisable value is determined on the basis of each inventory

line’s expected recoverable amount. Selling expenses are estimated and deducted to establish net realisable value.

The cost of inventories is based in the fi rst in fi rst out principle and includes expenditure incurred in acquiring the inventories and bringing them to their

existing location and condition.

(p) Impairment

The carrying amount of the consolidated entity’s assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine

whether there is any indication of impairment. If any such indication exists, the assets recoverable amount is estimated.

Impairment of receivables is not recognised until objective evidence is available that a loss event has occurred. Signifi cant receivables are individually

assessed for impairment. Impairment testing of signifi cant receivables that are not assessed as impaired individually is performed by placing them into

portfolios of signifi cant receivables with similar risk profi les and undertaking a collective assessment of impairment. Non-signifi cant receivables are not

individually assessed. Instead, impairment testing is performed by placing non-signifi cant receivables in portfolios of similar risk profi les, based on objective

evidence from historical experience adjusted for any effects of conditions existing at each balance sheet date.

An impairment loss is recognised whenever the carrying amount of an assets or its cash generating unit exceeds its recoverable amount. Impairment losses

are recognised in the Income Statement, unless an asset has previously been re-valued, in which case the impairment loss is recognised as a reversal to the

extent of that previous revaluation with any excess recognised through profi t and loss.


Calculation of Recoverable Amount

The recoverable amount of the consolidated entity’s investments in held-to-maturity securities and receivables carried at amortised cost is calculated at the

present value of estimated future cash fl ows, discounted at the original effective interest rate (i.e., the effective interest rate recognised at initial recognition of

these fi nancial assets). Receivables with a short duration are not discounted.

The recoverable amount of other assets is the greater of their net selling price and value in use. In assessing value in use, the estimated future cash fl ows

are discounted to their net present value using a pre tax discount rate that refl ects the current market assessments of the time value of money and the risks

specifi c to the asset. For an asset that does not generate largely independent cash infl ows, the recoverable amount is determined for the cash generating unit

to which the asset belongs.

Reversals of Impairment

An impairment loss in respect of a held to maturity security or receivable carried at amortised cost is reversed if the subsequent increase in recoverable

amount can be related objectively to an event occurring after the impairment loss was recognised.

In respect of other assets, an impairment loss is reversed if there has been a change in the estimates used to determine recoverable amount.

An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined,

net of depreciation or amortisation, if no impairment loss had been recognised.

(q) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, short term bills and call deposits. Bank overdrafts that are repayable on demand and form an

integral part of the consolidated entity’s cash management are included as a component of cash and cash equivalents for the purpose of the Statement

of Cash Flows.

(r) Investments

Financial instruments held by the consolidated entity are classifi ed as being available-for-sale and are stated at fair value, with any resultant gain or loss being

recognised directly in equity, except for impairment losses and, in the case of monetary items such as debt securities, foreign exchange gains and losses. The

fair value is their quoted bid price at the balance sheet date. When these investments are derecognised, the cumulative gain or loss previously recognised

directly in equity is recognised in profi t or loss. Where these investments are interest-bearing, interest calculated using the effective interest method is

recognised in the Income Statement.

Financial instruments classifi ed as available-for-sale investments are recognised / derecognised by the consolidated entity on the date it commits to purchase

/ sell the investments. Securities held-to-maturity are recognised / derecognised on the day they are transferred to / by the consolidated entity.

(s) Segment Reporting

A segment is a distinguishable component of the consolidated entity that is engaged either in providing products or services (business segment) or providing

products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of

other segments.

2 ACCOUNTING ESTIMATES AND JUDGEMENTS

Management discussed with the Audit Committee the development, selection and disclosure of the consolidated entity’s critical accounting policies and

estimates and the application of these accounting policies and estimates.

Key sources of estimation uncertainty

Provision for Warranty

The consolidated entity has a warranty provision for submarine related activities. This provision is calculated based on claims received and expected future

claims based on past sales and historical claim rates. ASC has a Through-Life Support (TLS) contract with the Commonwealth of Australia represented by the

58


2 ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

Defence Materiel Organisation for the maintenance of the Collins Class submarines. This contract began on 1 July 2004, and provides little historical evidence

for the calculation of the warranty provision. The historical detail from the previous build contract has therefore been considered as a base for determining

potential future warranty claims.

The historical data used in the estimation of the provision takes into consideration not only actual warranty claims made under the build contract, but also a

percentage of the historical re-work costs incurred by ASC within 1 year of acceptance of each submarine. These re-work costs are included in the calculation

because in prior periods potential warranty claims have been recorded and treated as re-work. The percentage used is based on management’s best estimate

at year end.

The consolidated entity has also estimated its exposure in relation to certain proceedings against it and based on an evaluation of the risk and overall

exposure, has assessed that a provision should be maintained.

Provision for Self Insurance

The provision for self insurance is raised when an incident occurs that may give rise to a workers’ compensation claim. This is measured by the estimated

cost of that claim, discounted to its present value. The margin is inclusive of a contingency which is intended to increase the probability that the provision will

remain adequate to meet the expected liabilities. The risk margin is required to allow for the inherent risks in the self insurance industry and for environmental

uncertainty. Under the APRA prudential standards for private sector insurers a probability suffi ciency of 75% is required as a minimum. ASC’s provision level is

in excess of the APRA minimum requirement, in line with the Company’s assessment of the risks that it is exposed to.



Note $’000 $’000 $’000 $’000

3 REVENUE

Revenue from rendering of services

Related parties 254,329 215,226 237,556 210,173

Other parties 346 1,816 335 818

254,675 217,042 237,891 210,991

Financial Income

Interest

Related parties - - 288 -

Other parties 4,954 5,494 4,953 5,490

Leveraged lease income 96 86 96 86

Fair value adjustment of leverage lease 819 - 819 -

5,869 5,580 6,156 5,576

Other income

From operating activities:

Secondment income received from:

Related parties - - - 70

Rental income received from:

Other parties 264 48 137 -

From outside operating activities:

Service Agreement Income - 6,324 - 6,324

Profi t from sale of non-current assets 117 276 - 7

Total other income 381 6,648 137 6,401

Total income 260,925 229,270 244,184 222,968




Note $’000 $’000 $’000 $’000

4 PROFIT BEFORE TAX

Items included in profi t before tax

Impairment of non current assets

- Write down on land and buildings - 611 - -

- Impairment on investment in subsidiary - - 2,600 -

Depreciation of:

Buildings 2,411 2,439 2,335 2,365

Plant and equipment 1,320 924 1,046 603

Total depreciation 3,731 3,363 3,381 2,968

Finance Costs:

Fair value adjustments on term loans 2 - 2 -

Bank charges 44 36 26 30

Interest Expenses

Other parties 24 - 1 -

70 36 29 30

Inventory write down/ (reversal of write down) 2,447 - 2,447 -

Operating lease rental expense:

Minimum lease payments 1,973 1,847 1,775 1,702

5 AUDITORS’ REMUNERATION

Audit services:

Amount received or due and receivable by the Australian National 236 232 236 209

Audit Offi ce (ANAO) as auditors of ASC

Other services:

KPMG have been contracted by ANAO to provide audit services on

the ANAO’s behalf. In addition to fees earned from the subcontracted

audit, KPMG have earned the following fees for engagements where

they have been separately contracted by ASC

- Other assurance services 31 32 31 31

- Taxation services 111 100 72 72

142 132 103 103

60




Note $’000 $’000 $’000 $’000

6 TAXATION

(a) Income tax expense

Recognised in the income statement

Current Tax Expense

Current Year 10,835 10,984 11,958 15,024

Adjustments for prior years 50 (343 ) 50 (58 )

10,885 10,641 12,008 14,966

Deferred Tax Expense

Origination and reversal of temporary differences (3,050 ) (6,235 ) (3,725 ) (6,270 )

Total income tax expense in income statement 7,835 4,406 8,283 8,696

Attributable to:

Continuing operations 7,835 4,406 8,283 8,696

Numerical reconciliation between tax expense and

pre-tax net profi t

Profi t before tax 26,322 20,483 27,940 31,712

Income tax using the domestic corporation tax rate of

30% (2005: 30%) 7,897 6,145 8,382 9,514

Increase in income tax expense due to:

Non-deductible expenses (112 ) (1,396 ) (149 ) (759 )

7,785 4,749 8,233 8,755

Under / (Over) provided in prior years 50 (343 ) 50 (59 )

Income tax expense on pre tax net profi t 7,835 4,406 8,283 8,696

Attributable to:

Continuing operations 7,835 4,406 8,283 8,696

(b) Current Income Tax Payable

Movements during the year were as follows:

Balance at the beginning of the year 5,948 2,508 5,948 2,508

Income tax paid (13,452 ) (6,546 ) (13,452 ) (6,546 )

Current year’s current income tax expense on operating profi t 10,835 10,984 11,959 15,024

Controlled entity provision - - (1,124 ) (4,040 )

Under/(over) provision in prior years (857 ) (998) (857 ) (998 )

2,474 5,948 2,474 5,948

(c) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the

following items:

Capital gain tax losses 1,342 1,314 1,314 1,314

1,342 1,314 1,314 1,314


DEFERRED TAX ASSETS DEFERRED TAX LIABILITIES NET

Jun-06 Jun-05 Jun-06 Jun-05 Jun-06 Jun-05

$’000 $’000 $’000 $’000 $’000 $’000

(d) Deferred Tax Assets and Liabilities

Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable

to the following:

Consolidated

Land, Building, Plant and equipment 2,774 2,050 (13,774 ) (12,984 ) (11,000 ) (10,934 )

Employee entitlements 5,501 6,306 - - 5,501 6,306

Provisions for warranty 3,191 2,880 - - 3,191 2,880

Project recognised profi t 101 1 - - 101 1

Leveraged lease 229 - (23,699 ) (25,979 ) (23,470 ) (25,979 )

Interest accrual - - (426 ) (385 ) (426 ) (385 )

Net pension assets - - (221 ) (395 ) (221 ) (395 )

Impairment loss - Investment in subsidiary - - - - - -

Sundry Items 116 73 (107 ) - 9 73

Net tax assets / (liabilities) 11,912 11,310 (38,227 ) (39,743 ) (26,315 ) (28,433 )

The Company

Land, Building, Plant and equipment 2,764 2,064 (12,512 ) (11,744 ) (9,748 ) (9,680 )

Employee entitlements 5,095 6,167 - - 5,095 6,167

Provisions for warranty 2,220 1,680 - - 2,220 1,680

Project recognised profi t 101 1 - - 101 1

Leveraged lease 229 - (23,699 ) (25,979 ) (23,470 ) (25,979 )

Interest Accrual - - (426 ) (385 ) (426 ) (385 )

Net pension assets - - (221 ) (395 ) (221 ) (395 )

Impairment loss - Investment in subsidiary 780 - - - 780 -

Sundry Items - - (48 ) - (48 ) -

Net tax assets / (liabilities) 11,189 9,912 (36,906 ) (38,503 ) (25,717 ) (28,591 )

62


7 SEGMENT REPORTING

Segments results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Unallocated items mainly comprise income earning assets and revenue, interest-bearing loans, borrowings and expenses, and corporate assets

and expenses.

Business segments

The consolidated entity comprises the following main business segments, based on the consolidated entity’s management reporting system:

Submarine: Submarine design, engineering, upgrading and maintenance, also include training school, Sea Otter and other submarine related work.

Shipbuilding: Ship design activities, from project defi nition through to implementation and construction.

SUBMARINE SHIPBUILDING ELIMINATIONS CONSOLIDATED

2006 2005 2006 2005 2006 2005 2006 2005 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

Revenue

External segment revenue 237,891 210,991 19,317 - (2,533 ) 4,975 254,675 215,966

Inter-segment revenue

Total segment revenue 237,891 210,991 19,317 - (2,533 ) 4,975 254,675 215,966

Other unallocated revenue 6,250 13,304

Total revenue 260,925 229,270

Result

Segment result 21,647 19,844 (5,527 ) - 3,951 (416 ) 20,072 19,428

Share of net profi t or loss of

equity accounted investments - -

Unallocated corporate

profi t/ (expenses) 6,250 1,055

Profi t from ordinary activities 26,322 20,483

before income tax

Income tax expenses (7,835 ) (4,406 )

Net profi t 18,487 16,077

Assets

Segment assets 125,420 138,706 10,533 - - - 135,953 138,706

Equity accounted investments

Unallocated corporate assets 109,994 156,491

Consolidated total assets 245,947 295,197

Liabilities

Segment liabilities 96,954 133,584 11,541 - - - 108,495 133,584

Unallocated corporate liabilities 23,258 54,281

Consolidated total liabilities 131,753 187,865

Acquisitions of non-current assets 3,497 3,612 - - - - 3,497 3,641

Geographical segments

The consolidated entity operates predominantly in one geographical segment being Australia.




Note $’000 $’000 $’000 $’000

8 CASH ASSETS AND BANK OVERDRAFT

Cash 6,455 3,366 6,454 3,337

Bank Overdraft (2,019 ) - - -

4,436 3,366 6,454 3,337

9 RECEIVABLES

Current

Trade debtors 44,215 49,342 43,037 49,190

Other debtors 4,585 4,340 4,551 4,340

Loans to controlled entities - - 769 -

Other loans - 6,020 - 5,981

48,800 59,702 48,357 59,511

Non current

Loans to controlled entities - - 5,796 -

Leveraged lease receivable 27,238 30,313 27,238 30,313

Less - unearned income (2,673 ) (2,769 ) (2,673 ) (2,769 )

24,565 27,544 30,361 27,544

Other Debtors

Other debtors also includes interest receivable.

Interest may be charged on trade debtors balances that are not repaid by the due date. Further, interest may be charged, at agreed upon rates normally

refl ecting market rates, where contract terms of repayment fall outside of the consolidated entity’s normal terms. Collateral may or may not be obtained.

Loans to ASC Shipbuilding Pty Limited and ASC Modules Pty Ltd (wholly owned controlled entities) attract a commercial rate of interest on the average

outstanding balance every six months. The commercial interest rate used is levied at a margin of 2% p.a. over Reserve Bank of Australia “Cash Rate”.

Refer to Note 3 for details of interest revenue in relation to these loans.

Other loans in prior year consist of amounts receivable in connection with the Thailand joint venture patrol boats projects and from Australian Submarine

Corporation (Thailand) Limited. No interest has been charged on these loans for the whole fi nancial year. This amount has been fully provided for.

64




Note $’000 $’000 $’000 $’000

10 INVENTORIES

Current

Raw materials and stores (at lower of cost or net realisable value) 9,637 13,002 9,637 12,931

9,637 13,002 9,637 12,931

11 OTHER FINANCIAL ASSETS

Current

Marketable interest securities (at fair value) 33,373 48,430 33,373 48,430

33,373 48,430 33,373 48,430

Non Current

Net Pension Assets 738 1,317 738 1,317

Marketable interest securities (at fair value) 46,634 56,239 46,634 56,239

Unlisted shares at cost - - 20,000 20,000

Less - Provision for Diminution - - (9,600 ) (7,000 )

47,372 57,556 57,772 70,556

Unlisted shares at cost consists of investments in the Company’s wholly

owned subsidiaries. The Company funds the defi ciency in net assets in

its wholly owned subsidiary ASC Shipbuilding Pty Limited and ASC

Modules Pty Limited.

The defi ciency is expected to be recovered from profi ts generated under

the AWD contract. The Company has recognised an impairment of

$2,600,000 in the investment in ASC Engineering Pty. Limited in the

2005/06 fi nancial year.

12 INVESTMENT ACCOUNTED FOR USING EQUITY METHOD

Associates - ASCOV Pty Ltd (50% owned, dormant) 5 5 5 5

5 5 5 5

13 OTHER CURRENT ASSETS

Prepayments 483 715 417 565

483 715 417 565




Note $’000 $’000 $’000 $’000

14 PROPERTY, PLANT AND EQUIPMENT

Freehold land

At independent valuation 14,349 14,349 9,200 9,200

Buildings

At independent valuation 52,520 52,520 51,000 51,000

Plant & equipment

At cost 46,842 43,123 34,422 30,578

Accumulated depreciation (39,366 ) (38,367 ) (27,756 ) (26,997 )

7,476 4,756 6,666 3,581

Capital works in progress 912 1,942 912 1,918

Total property, plant and equipment 75,257 73,567 67,778 65,699

Reconciliations

Reconciliations of the carrying amounts for each class of property,

plant and equipment are set out below:

Freehold land

Carrying amount at beginning of year 14,349 2,638 9,200 1,200

Additions - - - -

Disposals - - - -

Revaluation increments/(decrements) - 14,861 - 8,000

Write down - (3,150 ) - -

Carrying amount at the end of year 14,349 14,349 9,200 9,200

Buildings


Additions - - - -

Transfers from capital works in progress 370 708 370 710

Disposals - - - -

Revaluation increments/(decrements) 2,041 30,425 1,965 30,613

Depreciation (2,411 ) (2,439 ) (2,335 ) (2,365 )


66




Note $’000 $’000 $’000 $’000

14 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)

Plant and equipment


Additions - 6 - -

Transfers from capital works in progress 4,134 2,445 4,132 2,445

Disposals (94 ) (25 ) (1 ) (25 )

Depreciation (1,320 ) (924 ) (1,046 ) (603 )


Capital works in progress


Additions/(write off) 3,476 3,635 3,497 3,612

Transfers to property, plant & equipment (4,506 ) (3,154 ) (4,503 ) (3,154 )

Carrying amount at the end of year 912 1,942 912 1,918

Valuations

An independent valuation of all land and buildings of the Company and

its wholly owned subsidiary entities was carried out by Maloney Field

Services Property Consultants & Valuers on the basis of open market

values for existing use as at 30 June 2005 and a re-assessment of the

valuation was carried out as at 30 June 2006.

15 PAYABLES

Trade creditors 18,821 31,568 18,350 27,985

Other creditors and accruals 12,183 48,705 11,872 48,606

31,004 80,273 30,222 76,591

Advance income received:

Contract billings due and receivable 263,263 5,185,111 250,701 5,097,134

Contract works in progress (229,115 ) (4,762,773 ) (204,470 ) (4,666,856 )

Profi t recognised to date (7,836 ) (407,026 ) (18,145 ) (414,448 )

Net progress payments received and receivable 26,312 15,312 28,086 15,830

Total payables 57,316 95,585 58,308 92,421




Note $’000 $’000 $’000 $’000

16 NON INTEREST BEARING LIABILITIES

Current

Loans from controlled entities - - 2,801 1,571

Loans from associate entities 5 360 5 360

5 360 2,806 1,931

Non current

Term loan 3 360 2 160

3 360 2 160

Term loan consists of the interest free 99 year loans to ASC Pty Ltd and

ASC Engineering Pty. Limited from the Department of Manufacturing

Industry, Small Business and Regional Development (SA), for expenditure

on capital items and to assist with site development costs.

(i) ASC Engineering Pty. Limited ($200,000): repayable in the year 2094

or at the option of the Company at any time prior to the year 2094.

(ii) ASC Pty Ltd ($160,000): repayable in the year 2092 or at the option

of the Company at any time prior to the year 2092. Both of these two

term loans have been discounted to their fair value of $3,000 in total in

the fi nancial year ended 30 June 2006 under AASB139 (Financial

Instruments: Recognition and Measurement)

Financing arrangements

Unsecured facilities

Total facilities available

Overdraft facilities 12,000 - - -

Bank guarantees and letters of credit 18,297 4,012 15,411 732

30,297 4,012 15,411 732

Facilities utilised at balance date


Bank guarantees and letters of credit 13,297 4,012 10,411 732

15,316 4,012 10,411 732

Facilities not utilised at balance date


Bank guarantees and letters of credit 5,000 - 5,000 -

14,981 - 5,000 -

68




Note $’000 $’000 $’000 $’000

17 PROVISIONS

Current

Employee entitlements, including on costs 15,293 14,745 14,279 14,318

Warranty 6,218 6,256 2,981 2,256

Self Insured Workers Compensation 2,121 2,300 2,121 2,300

Dividends 6,350 7,200 6,350 7,200

Other 617 5,895 - 5,645

30,599 36,396 25,731 31,719

Non current

Employee entitlements, including on costs 2,813 2,451 2,706 2,422

Warranty 4,419 3,344 4,419 3,344

Self Insured Workers Compensation 5,790 3,678 5,790 3,678

13,022 9,473 12,915 9,444

Provisions movements:

Warranty

Balance at 1 July 2005 (Current & Non Current) 9,600 5,600

Provision made during the year 1,800 1,800

Provision used during the year (763 ) -

Balance at 30 June 2006 (Current & Non Current) 10,637 7,400

Self Insured Workers Compensation



Provision used during the year (2,126 ) (2,126 )


Dividends





Other


Provision made during the year 367 -


Balance at 30 June 2006 (Current & Non Current) 617 -




Note $’000 $’000 $’000 $’000

18 ISSUED CAPITAL

Opening issued and paid-up share capital -

10 million ordinary shares (1 July) 10,000 10,000 10,000 10,000

Movement during the reporting period - - - -

Closing issued and paid-up share capital 10,000 10,000 10,000 10,000

19 RESERVES

Opening Asset Revaluation Reserve (1 July) 29,762 - 26,869 -

Revaluation Increment 1,252 29,762 1,198 26,869

Closing Assets Revaluation Reserve Balance 31,014 29,762 28,067 26,869

Total Reserves 31,014 29,762 28,067 26,869

Asset Revaluation Reserve

Comprises of:

- Land 8,493 8,493 5,600 5,600

- Building 22,521 21,269 22,467 21,269

Closing Balance 31,014 29,762 28,067 26,869

20 RETAINED EARNINGS

Opening Retained earnings (1 July) 67,570 60,495 81,495 67,481

Effect of change in accounting policy:

Net change in fair value of leverage lease receivable (1,107 ) - (1,107 ) -

Net change in fair value of non current interest free term loan 253 - 112 -

66,716 60,495 80,500 67,481

Total recognised income and expense for the year 17,564 16,775 18,734 23,714

Dividends 21 (11,100 ) (9,700 ) (11,100 ) (9,700 )

Closing Retained earnings 73,180 67,570 88,134 81,495

Total Closing Equity Balance 114,194 107,332 126,201 118,364

70




Note $’000 $’000 $’000 $’000

21 DIVIDENDS

Interim fully franked dividend, declared and paid 4,750 2,500 4,750 2,500

Final fully franked dividend, declared and provided for 6,350 7,200 6,350 7,200

Total fully franked dividend, represents a distribution to the shareholder 11,100 9,700 11,100 9,700

All dividends declared during the year were paid out of AIFRS profi ts.

Dividends franking account

Class C (30%) franking credits 64,034 55,342 64,034 55,342

The above available amounts are based on the balance of the dividend

franking account at year-end adjusted for:

(a) franking credits that will arise from the payment of the amount of the

provision for income tax

(b) franking debits that will arise from the payment of the dividends

recognised as a liability at year-end

(c) franking credits that will arise from the receipt of dividends recognised

as receivables at year-end

(d) franking credits that the entity may be prevented from distributing in

subsequent years

The ability to utilise the franking credits is dependent upon there being

suffi cient available profi ts to declare dividends.

22 COMMITMENTS

(a) Capital Expenditure Commitments

Contracted but not provided for and payable:

Not later than one year 611 806 611 806

(b) Operating Lease Commitments

Non-cancellable future operating lease rentals not provided for in the

fi nancial statements and payable:

Not later than one year 2,180 1,795 2,008 1,795

Later than one year but not later than fi ve years 2,051 2,043 1,811 2,043

Later than fi ve years 1 430 1 430

4,232 4,268 3,820 4,268

The consolidated entity leases computer and other equipment under operating leases expiring from one to three years. Leases generally provide the

consolidated entity with a right of renewal at which time all terms are renegotiated.

(c) Hire purchase commitments

The Company and its controlled entities have no hire purchase commitments as at the reporting date.




Note $’000 $’000 $’000 $’000

Movements in the net liability/(asset) for defi ned benefi ts

obligations recognised in the balance sheet

Net liability/(asset) for defi ned benefi t obligations at 1 July (1,317 ) (429 ) (1,317 ) (429 )

Contributions received (68 ) (60 ) (68 ) (60 )

Expense/(income) recognised in the income statement (671 ) 169 (671 ) 169

Actuarial (gains)/losses recognised directly in equity 1,318 (997 ) 1,318 (997 )

Net liability/(asset) for defi ned benefi t obligations at 30 June (738 ) (1,317 ) (738 ) (1,317 )

Defi ned benefi t superannuation fund

Amounts in the balance sheet

Liability - - - -

Asset 738 1,317 738 1,317

Net Asset 738 1,317 738 1,317

Amounts for the current and previous period are as follows:

Defi ned benefi t obligation (13,874 ) (12,277 ) (13,874 ) (12,277 )

Fund assets 14,612 13,594 14,612 13,594

Surplus/(defi cit) 738 1,317 738 1,317

Experience adjustments on fund assets (310 ) 1,236 (310 ) 1,236

The Company and its controlled entities have used the AASB 1.20A exemption and disclosed amounts under AASB 1.20A(p) above for each annual reporting

period prospectively from the transition date.

(d) Superannuation Commitments

The Company and its controlled entities contribute to a superannuation fund that provides for a combination of accumulation and defi ned benefi ts.

Employees contribute to the fund at various percentages of their gross income. The Company and its controlled entities also contribute to the fund at

varying contribution rates depending on the category of fund membership of each member. After serving a qualifying period, all employees are entitled to

benefi ts on retirement, disability or death. The trustee of the fund is Trust Company Superannuation Services Limited and the administrator of the fund is

KPMG Superannuation Services Pty Limited.

DEFINED BENEFITS PLAN

Defi ned Benefi t Category

The Company and its controlled entities make contributions to a defi ned benefi t superannuation fund that provides defi ned benefi ts for employees on

retirement. The fund provides defi ned benefi ts based on years of service and fi nal average salary.

An actuarial assessment of the fund as at 30 June 2006 was carried out by Jules Gribble, Fellow of the Institute of Actuaries of Australia, a principal of

ASKIT Consulting Pty Ltd on 30 June 2006. The actuary concluded that the assets of the defi ned benefi t category of the fund are suffi cient to meet all

benefi ts payable in the event of the defi ned benefi t category’s termination, or the voluntary or compulsory termination of employment of each employee of

the Company and other controlled entities.

72




Note $’000 $’000 $’000 $’000

22 COMMITMENTS (CONTINUED)

(d) Superannuation Commitments (continued)

Changes in the present value of the defi ned benefi t obligation

are as follows:

Opening defi ned benefi t obligation 12,277 11,383 12,277 11,383

Service cost 87 86 87 86

Interest cost 587 569 587 569

Actuarial losses/(gains) 1,008 239 1,008 239

Benefi ts paid (85 ) - (85 ) -

Closing defi ned benefi t obligation 13,874 12,277 13,874 12,277

Changes in the fair value of fund assets are as follows:

Opening fair value of fund assets 13,594 11,812 13,594 11,812

Expected return 1,345 485 1,345 485

Actuarial gains/(losses) (310 ) 1,236 (310 ) 1,236

Contributions by employer 68 60 68 60

Benefi ts paid (85 ) - (85 ) -

14,612 13,594 14,612 13,594

The major categories of fund assets as a percentage of total fund

assets are as follows:

Australian Equities 38% 63% 38% 63%

International Equities 31% 20% 31% 20%

Australian Fixed Interest 14% 4% 14% 4%

International Fixed Interest 4% 1% 4% 1%

Property Trusts 4% 2% 4% 2%

Private Equity 1% 0% 1% 0%

Cash 8% 10% 8% 10%

100% 100% 100% 100%

The investment policies and strategies of the Company and its controlled entities for the defi ned benefi t superannuation fund do not use target allocations for

the individual asset categories. The investment goals of the Company and its controlled entities are to maximise returns subject to specifi c risk management

policies. The risk management policies permit investments in mutual funds, and prohibit direct investments in debt and equity securities and derivative

fi nancial instruments. The Company and its controlled entities address diversifi cation by the use of mutual fund investments whose underlying investments are

domestic and international fi xed income securities and domestic and international equity securities. These mutual funds are readily marketable and can be

sold to fund benefi t payment obligations as they become payable.




Note $’000 $’000 $’000 $’000

(d) Superannuation Commitments (continued)

Expense recognised in the income statement:

Current service costs 87 86 87 86

Interest cost 587 569 587 569

Expected return on fund assets (1,345 ) (485 ) (1,345 ) (485 )

(671 ) 169 (671 ) 169

Actuarial gains/(losses) are recognised directly in equity.

The expense is recognised in the following line items in the

income statement:

Pension Costs/(Revenues) (739 ) 109 (739 ) 109

Contribution paid ( in Labour Costs) 68 60 68 60

(671 ) 169 (671 ) 169

Actual return on fund assets 1,035 1,722 1,035 1,722

1,035 1,722 1,035 1,722

The Company and its controlled entities expect to contribute $77,000

to the defi ned benefi t superannuation fund in the 2007 fi nancial year.

Principal actuarial assumptions at the balance sheet date:

Discount rate at 30 June 4.8% 4.4% 4.8% 4.4%

Expected return on fund assets at 30 June 9.9% 9.9% 9.9% 9.9%

Future salary increases 5.8% 5.9% 5.8% 5.9%

The overall expected long-term rate of return on assets is 7.5%. The expected long-term rate of return is based on the portfolio as a whole and not on

the sum of the returns on individual asset categories. The return is based on historical returns, without adjustments.

(e) Other Commitments

The Company has commitments for expenditure in respect of contracts let to subcontractors for the supply of constituent elements required under the

Company’s contract with the Commonwealth of Australia. The fi nal amount of these commitments is not quantifi able. The timing of the Company’s

commitment for this expenditure is matched by a corresponding receivable from the Commonwealth of Australia. These future receivables are expected to

exceed the maximum value of the commitments for expenditure.

74


23 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The company has entered into various business arrangements that call for the granting of various performance guarantees and issuance of letters of credit.

24 REGISTERED CHARGES

The Commonwealth Government of Australia holds registered charges over the facilities of the Company, procured for the purpose of the construction of

submarines. The above charges are held against default of the contract.

25 ECONOMIC DEPENDENCY

The normal trading activities of ASC Pty Ltd and its subsidiaries depend on contracts the Company and its subsidiaries have with the Commonwealth

Government of Australia for the maintenance of six submarines and the construction of three air warfare destroyers. That dependency existed during all of

the fi nancial year.

26 PRINCIPAL AREAS OF ACTIVITY OF THE COMPANY

The principal activity of the Company during the course of the fi nancial year was the enhancement, engineering and maintenance of six submarines for the

Royal Australian Navy and the preparation for the construction of three air warfare destroyers.

27 KEY MANAGEMENT PERSONNEL DISCLOSURE

Key management personnel compensation

The key management personnel compensation included in personnel expenses are as follows:



Note $’000 $’000 $’000 $’000

Short-term employee benefi ts 805 724 805 724

Other long-term benefi ts - - - -

Post - employment benefi ts 67 70 67 70

Termination benefi ts - - - -

Equity compensation benefi ts - - - -

872 794 872 794

Loans to key management personnel

No loan was outstanding at the reporting date to key management personnel.

Other key management personnel transactions with the Company and its controlled entities

From time to time there may be transactions between the key management personnel and the Company and its controlled entities. The terms and conditions of

those transactions would be no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non key

management personnel related entities on an arm’s length basis. There have been no transaction with key management personnel during the fi nancial year.

28 EVENTS SUBSEQUENT TO BALANCE DATE

There are no other matters that have arisen between the end of the fi nancial year and the date of this report including any item, transaction or event of a

material and unusual nature likely, in the opinion of the Directors of the Company, to affect signifi cantly the operations of the economic entity, the results of

those operations, or the state of affairs of the consolidated entity, in subsequent fi nancial years.


29 RELATED PARTY DISCLOSURES

Directors

The names of each person holding the position of Director of ASC Pty Ltd during the fi nancial year are Messrs JB Prescott AC, General (Rtd) JS Baker AC

DSM, CNH Bagot, GR Bulmer, SE Young & GR Tunny. On 30 June 2006, Mr SE Young resigned as director of the Company.

The expenses incurred by directors in discharging duties of their offi ce were reimbursed.

Other Related Parties

Shareholders

In performing its contracts, the Company has transacted on normal commercial terms and conditions with the following shareholder:

- the Commonwealth of Australia and its related entities.

The Commonwealth of Australia has provided auditing services to the Company through the Australian National Audit Offi ce (ANAO).

The Commonwealth of Australia is the ultimate parent entity.

The Company is a large proprietary company, incorporated in Australia. The registered offi ce and principal place of business is Mersey Road,

Osborne SA 5017.

Transactions with Shareholders

During the year, the amounts received or receivable by the Company from the Commonwealth of Australia for various projects was $224,921,000

(2005: $214,630,000).

During the year, the amounts of audit fees paid to ANAO was $236,000 (2005: $232,000)

Certain expenditure incurred by the Company on behalf of shareholders has been recharged and will be settled in accordance with normal commercial terms

and conditions.

Balances with Shareholders 2006 2005

$’000 $’000

The aggregate amounts payable to the shareholders in relation to these transactions are: - -

The aggregate amounts receivable from the shareholders in relation to these transactions are: 44,120 45,739

Wholly-Owned Controlled Entities and Other Related Entities

Details of interests in wholly-owned controlled entities are set out at note 30. Details of dealings with these entities are set out below.

Loans

Amount receivable from ASC Shipbuilding Pty Limited and ASC Modules Pty Ltd (wholly owned controlled entities) attract a commercial rate of interest on the

average outstanding balance every six months. The commercial interest rate used is levied at a margin of 2% p.a. over Reserve Bank of Australia “Cash Rate”.

Refer to Note 3 for details of interest revenue in relation to these loans.

No interest is charged on the current loans receivable from or payable to ASC Engineering Pty. Limited and ASC AWD Shipbuilder Pty Ltd (wholly owned

controlled entities) and these loans are repayable at call.

76


29 RELATED PARTY DISCLOSURES (CONTINUED)

Balances with Entities within the Wholly-Owned Group

2006 2005

$’000 $’000

The amounts currently payable to the wholly-owned controlled entities by the Company at balance date: 2,801 1,571

The amounts currently receivable from the wholly-owned controlled entities by the Company at

balance date: 6,564 -

30 PARTICULARS IN RELATION TO CONTROLLED ENTITIES

COUNTRY OF INCORPORATION ENTITY INTEREST

2006 2005

Parent entity % %

ASC Pty Ltd Australia

Controlled entities

ASC Engineering Pty Limited Australia 100 100

ASC Shipbuilding Pty Limited Australia 100 100

ASC Modules Pty Ltd Australia 100 100

ASC AWD Shipbuilder Pty Ltd Australia 100 100

ASC Modules Pty Ltd is a non trading company.

ASC AWD Shipbuilder Pty Ltd is the “Special Purpose Vehicle” required for the AWD Build Program.


31 ADDITIONAL FINANCIAL INSTRUMENT DISCLOSURES

(a) Interest rate risk

At balance date the consolidated entity and the Company have an unrealised gain of $59,841 (2005: gain of $0) in the market value of money market

securities held (bank accepted bills and negotiable certifi cates of deposit).

The exposures of the consolidated entity and the Company to interest rate risk and the effective weighted average interest rate for classes of

fi nancial assets and fi nancial liabilities are set out below:

30th June 2006 Fixed interest maturing in:

Floating 1 year Over 1 to More than Non interest Total Effective

interest rate or less 5 years 5 years bearing interest rate

Note $’000 $’000 $’000 $’000 $’000 $’000

Consolidated

Financial assets

Cash 8 6,455 - - - - 6,455 5.68%

Term Deposits 8 - - - - - - 0.00%

Brokers Deposits 8 - - - - - - 0.00%

Bonds 8 - - - - - - 0.00%

Marketable interest securities (at fair value) 11 - 33,373 46,634 - - 80,007 6.09%

6,455 33,373 46,634 - - 86,462

Financial liabilities

Bank overdrafts 8 2,019 - - - - 2,019 5.89%

Loans 16 - - - - - - 0.00%

Term Loan 16 - - - - 3 3 0.00%

2,019 - - - 3 2,022

Company

Financial assets

Cash 8 6,454 - - - - 6,454 5.68%

Term Deposits 8 - - - - - - 0.00%


Bonds 8 - - - - - - 0.00%

Loans to controlled entities 9 5,796 - - - 769 6,565 6.66%

Marketable interest securities (at fair value) 11 - 33,373 46,634 - - 80,007 6.09%

12,250 33,373 46,634 - 769 93,026


Bank overdrafts 8 - - - - - - 0.00%

Loans 16 - - - - - - 0.00%

Term Loan 16 - - - - 2 2 0.00%

- - - - 2 2

78


31 ADDITIONAL FINANCIAL INSTRUMENT DISCLOSURES (CONTINUED)

(a) Interest rate risk (continued)

The exposures of the consolidated entity and the Company to interest rate risk and the effective weighted average interest rate for classes of fi nancial assets

and fi nancial liabilities for the previous fi nancial year are set out below:

30th June 2005 Fixed interest maturing in:

Floating 1 year Over 1 to More than Non interest Total Effective

interest rate or less 5 years 5 years bearing interest rate

Note $’000 $’000 $’000 $’000 $’000 $’000

Consolidated

Financial assets

Cash 8 3,366 - - - - 3,366 5.50%

Term Deposits 8 - - - - - - 0.00%


Bonds 8 - - - - - - 0.00%

Marketable interest securities (at cost) 11 - 48,430 56,239 - - 104,669 5.74%

3,366 48,430 56,239 - - 108,035



Loans 16 - - - - - - 0.00%

Term Loan 16 - - - - 360 360 0.00%

- - - - 360 360

Company

Financial assets

Cash 8 3,337 - - - - 3,337 5.50%

Term Deposits 8 - - - - - - 0.00%


Bonds 8 - - - - - - 0.00%

Loans to controlled entities 9 - - - - - - 0.00%

Marketable interest securities (at cost) 11 - 48,430 56,239 - - 104,669 5.74%

3,337 48,430 56,239 - - 108,006



Loans 16 - - - - - - 0.00%

Term Loan 16 - - - - 160 160 0.00%

- - - - 160 160

(b) Foreign exchange risk

The consolidated entity has not entered into forward foreign exchange contracts to hedge anticipated purchase and sale commitments denominated in

foreign currencies during the reporting period.

The consolidated entity did not have any outstanding foreign exchange contracts as at reporting date.


(c) Credit risk exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

Recognised fi nancial instruments

The credit risk on fi nancial assets of the consolidated entity which have been recognised on the Balance Sheet, is the carrying amount, net of any provision

for doubtful debts.

A substantial proportion of the consolidated entity’s operations are in relation to the Through Life Support Contract for six Collins Class submarines and

therefore a material exposure with an individual customer exists (the Commonwealth Government of Australia).

Off Balance Sheet Financial Instruments

The Company and its controlled entities have not entered into any off Balance Sheet fi nancial instruments during the reporting period.

(d) Net fair values of fi nancial assets and liabilities

Valuation approach

Net fair values of fi nancial assets and liabilities are determined by the consolidated entity on the following basis:

Recognised fi nancial instruments

The net fair value of cash and cash equivalents and non interest bearing monetary fi nancial assets and fi nancial liabilities of the consolidated entity

approximates their carrying value.

The net fair value of other monetary fi nancial assets and fi nancial liabilities is based upon market prices.

Unrecognised fi nancial instruments

No unrecognised fi nancial instruments were held as at reporting date.

32 EXPLANATION OF TRANSITION TO AIFRSs

(a) Notes to reconciliation to equity

In preparing its opening AIFRS Balance Sheet, the consolidated entity has adjusted amounts reported previously in fi nancial statements prepared in

accordance with its old basis of accounting (previous GAAP). An explanation of how the transition from previous GAAP to AIFRSs has affected the

consolidated entity’s fi nancial position, fi nancial performance and cash fl ows is set out in the following tables and the notes that accompany the tables.

(i) Taxation

Under AASB 112 Income Taxes, the balance sheet method of tax effect accounting is adopted, rather than the liability method applied previously

under Australian GAAP.

Under the balance sheet approach, income tax on the Balance Sheet for the year comprises current and deferred taxes. Income tax is recognised in the

Balance Sheet except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at reporting date, and any

adjustments to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amount of assets and liabilities for

fi nancial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of

realisation of the asset and settlement of the liability, using tax rates enacted or substantively enacted at reporting date.

80


32 EXPLANATION OF TRANSITION TO AIFRSs (CONTINUED)

(a) Notes to reconciliation to equity (continued)

(i) Taxation (continued)

A deferred tax asset is recognised only to the extent that it is probable that future taxable profi ts are available against which the asset can be utilised.

Deferred tax asset is reduced to the extent it is no longer probable that the related tax benefi t is realised.

The tax effect accounting impact on the consolidated entity at 1 July 2004 and at 30 June 2005 in relation to recognition of defi ned benefi t plan

surplus assets.

(1a) 1 July 2004 CONSOLIDATED ENTITY THE COMPANY

Opening Retained Earnings 128,000 decrease 128,000 decrease

Deferred Tax Liabilities 128,000 increase 128,000 increase

(1b) 30 June 2005 CONSOLIDATED ENTITY THE COMPANY

Retained Earnings 299,000 decrease 299,000 decrease

Deferred Tax Expenses 33,000 decrease 33,000 decrease

Deferred Tax Liabilities 266,000 increase 266,000 increase

The impact on the consolidated entity at 30 June 2005 in relation to fi xed asset revaluations, of the change in basis and the transition adjustments on the

deferred tax balances.

(2) 30 June 2005 CONSOLIDATED ENTITY THE COMPANY

Deferred Tax Liabilities 12,984,000 increase 11,744,000 increase

Assets Revaluation Reserve 12,984,000 decrease 11,744,000 decrease

Under AASB 112 Income Taxes, deferred tax assets and liabilities must be offset if, and only, if:

- the entity has a legally enforceable right to set off current tax assets against current tax liabilities; and

- the deferred tax assets and liabilities relate to income taxes levied by the same tax authority on either:

- the same taxable entity; or

- different taxable entities that intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities

simultaneously, in each future period in which signifi cant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

The impact on the consolidated entity at 1 July 2004 in relation to this tax offset.

(3a) 1 July 2004 CONSOLIDATED ENTITY THE COMPANY

Deferred Tax Assets 7,966,000 decrease 7,966,000 decrease

Deferred Tax Liabilities 7,966,000 decrease 7,966,000 decrease

The impact on the consolidated entity at 30 June 2005 in relation to this tax offset.

(3b) 30 June 2005 CONSOLIDATED ENTITY THE COMPANY

Deferred Tax Assets 3,344,000 decrease 1,946,000 decrease

Deferred Tax Liabilities 3,344,000 decrease 1,946,000 decrease


Tax consolidation

The UIG 1052 is currently deliberating the recognition of tax amounts under the tax consolidation regime in the AIFRS framework. It is currently proposed that

wholly owned subsidiaries in the tax consolidated group will be required to recognise their own tax balances directly, and the current tax liability or asset will

be assumed by the head entity via an equity contribution or distribution.

There is no impact on the consolidated entity but the impact on the Company at 30 June 2005 in relation to recognition of tax balances directly by all

wholly owned subsidiaries

(4) 30 June 2005 CONSOLIDATED ENTITY THE COMPANY

Deferred Tax Assets 0 1,398,000 decrease

Non interest bearing liabilities – intercompany loans 0 1,398,000 decrease

(ii) Employee benefi ts

Defi ned benefi t plans

The consolidated entity has early adopted AASB 119 Employee Benefi ts (December 2004). Under AASB 119, the consolidated entity’s net obligation in

respect of defi ned benefi t superannuation plans is calculated separately for each plan by estimating the amount of future benefi t that employees have

earned in return for their service in the current and prior periods; that benefi t is discounted to determine its present value, and the fair value of any plan

assets is deducted.

The discount rate is the rate attaching to AAA credit rated bonds that have maturity dates which most closely match the terms of maturity of the related

liabilities. Where AAA credit rated bonds are not available, and specifi cally for all Australian Dollar denominated obligations, the discount rate is the rate

attaching to national government bonds at reporting date which most closely match the terms of maturity of the related liabilities.

When the employee entitlements under the plan are improved, the proportion of the increased benefi t relating to past service by employees is recognised as

an expense in the Income Statement on a straight line basis over the average period until the benefi ts become vested. To the extent that the benefi ts vest

immediately, the expense is recognised immediately in the Income Statement.

Where the calculation results in a net benefi t to the consolidated entity, the recognised asset is limited to the net total of any unrecognised past service costs

and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses that arise subsequent to the transition date are recognised directly to retained earnings.

Under Australian GAAP, defi ned benefi t plans are accounted for on a cash basis, with no defi ned benefi t obligation or plan assets recognised in the Balance

Sheet. Under AIFRS, at 1 July 2004 an amount of $429,000(5) has been recorded as an asset of both the consolidated entity and the Company with a

consequential increase in retained earnings. For the fi nancial year ended 30 June 2005 the consolidated entity and the Company have recorded an increase

to the net pension asset of $888,000(6), an increase to retained earnings of $997,000(7) and a $109,000(8) charge to the Income Statement.

(iii) Explanation of material adjustment to the Statements of Cash Flows for 2005

There is no material adjustment between the Statements of Cash Flows presented under AIFRSs and the Statements of Cash Flows presented under

previous GAAP.

82



(b) Reconciliation of Profi t for 2005

CONSOLIDATED

Previous GAAP Ref No. Effect of AIFRSs transition to AIFRSs

30-Jun-05

$’000 $’000 $’000

Revenue from rendering of services 217,042 217,042

Other income 12,228 12,228

Expenses from ordinary activities

Materials and subcontractors (75,330 ) (75,330 )

Labour (93,461 ) (93,461 )

Depreciation and amortisation (3,363 ) (3,363 )

Professional fees (4,592 ) (4,592 )

Repairs and maintenance (3,106 ) (3,106 )

Utilities expense (2,273 ) (2,273 )

Finance costs - -

Insurance (1,966 ) (1,966 )

Motor vehicle expenses (1,010 ) (1,010 )

Operating lease (1,847 ) (1,847 )

Production consumables and supplies (1,108 ) (1,108 )

Security expenses (713 ) (713 )

Travelling expenses (1,261 ) (1,261 )

Service agreement costs (6,324 ) (6,324 )

Self Insured Warranty (4,160 ) (4,160 )

Self Insured Worker’s Compensation (3,023 ) (3,023 )

Write Down of Land and Buildings (612 ) (612 )

Other expenses from ordinary activities (4,529 ) (8) (109 ) (4,638 )

Share of net profi ts of associates and joint ventures accounted for

using the equity method - -

Profi t from ordinary activities before related income tax expense 20,592 20,483

Income tax (expense)/benefi t relating to ordinary activities (4,439 ) (1b) 33 (4,406 )

Profi t from ordinary activities after related income tax expense 16,153 16,077


THE COMPANY

Previous GAAP Ref No. Effect of AIFRSs transition to AIFRSs

30-Jun-05

$’000 $’000 $’000

210,991 210,991

11,977 11,977

(64,278 ) (64,278 )

(89,980 ) (89,980 )

(2,968 ) (2,968 )

(4,192 ) (4,192 )

(2,960 ) (2,960 )

(2,013 ) (2,013 )

- -

(1,671 ) (1,671 )

(941 ) (941 )

(1,702 ) (1,702 )

(1,038 ) (1,038 )

(491 ) (491 )

(1,227 ) (1,227 )

(6,324 ) (6,324 )

(4,160 ) (4,160 )

(3,023 ) (3,023 )

- -

(4,179 ) (8 ) (109 ) (4,288 )

- -

31,821 31,712

(8,729 ) (1b) 33 (8,696 )

23,092 23,016

84



(c) Reconciliation of equity

CONSOLIDATED

Previous Ref No. Effect of

GAAP transition

to AIFRSs AIFRSs

1-JUL-04

CURRENT ASSETS

Cash assets 7,683 7,683

Receivables 50,577 50,577

Other fi nancial assets 46,680 46,680

Inventories 9,691 9,691

Other 585 585

TOTAL CURRENT ASSETS 115,216 115,216

NON CURRENT ASSETS

Receivables 29,419 29,419

Investments accounted for using the equity method 55 55

Other fi nancial assets 59,652 (5 ) 429 60,081

Property, plant and equipment 31,179 31,179

Deferred tax assets 7,966 (3a) (7,966 ) -

TOTAL NON CURRENT ASSETS 128,271 120,734

TOTAL ASSETS 243,487 235,950

CURRENT LIABILITIES

Payables 111,988 111,988

Non interest-bearing liabilities - -

Provision for Current Income Tax 2,508 2,508

Provisions 27,979 27,979

TOTAL CURRENT LIABILITIES 142,475 142,475

NON CURRENT LIABILITIES

Non interest-bearing liabilities 360 360

Deferred tax liabilities 28,567 (1a),(3a) (7,838) 20,729

Provisions 1,891 1,891

TOTAL NON CURRENT LIABILITIES 30,818 22,980

TOTAL LIABILITIES 173,293 165,455

NET ASSETS 70,194 70,495

EQUITY

Contributed equity 10,000 10,000

Reserves - -

Retained profi ts 60,194 (1a),(5) 301 60,495

TOTAL EQUITY 70,194 70,495



GAAP transition

to AIFRSs AIFRSs


30-JUN-05 30-JUN-051-JUL-04

3,366 3,366 7,642 7,642 3,337 3,337

59,702 59,702 49,602 49,602 59,511 59,511

48,430 48,430 46,680 46,680 48,430 48,430

13,002 13,002 9,574 9,574 12,931 12,931

715 715 409 409 565 565

125,215 125,215 113,907 113,907 124,774 124,774

27,544 27,544 29,419 29,419 27,544 27,544

5 5 47 47 5 5

56,239 (5),(6) 1,317 57,556 72,652 (5) 429 73,081 69,239 (5),(6) 1,317 70,556

73,567 73,567 26,466 26,466 65,699 65,699

11,310 (3a),(3b) (11,310 ) - 7,966 (3a) (7,966) - 11,310 (3a),(3b),(4) (11,310 ) -

168,665 158,672 136,550 129,013 173,797 163,804

293,880 283,887 250,457 242,920 298,571 288,578

95,585 95,585 109,087 109,087 92,421 92,421

360 360 7,753 7,753 3,329 (4) (1,398 ) 1,931

5,948 5,948 2,508 2,508 5,948 5,948

36,396 36,396 23,319 23,319 31,719 31,719

138,289 138,289 142,667 142,667 133,417 132,019

360 360 160 160 160 160

26,365 (1a),(1b),(2),(3a),(3b) 2,068 28,433 28,567 (1a),(3a) (7,838) 20,729 26,365 (1a),(1b),(2),(3a),(3b) 2,226 28,591

9,473 9,473 1,883 1,883 9,444 9,444

36,198 38,266 30,610 22,772 35,969 38,195

174,487 176,555 173,277 165,439 169,386 170,214

119,393 107,332 77,180 77,481 129,185 118,364

10,000 10,000 10,000 10,000 10,000 10,000

42,746 (2 ) (12,984 ) 29,762 - - 38,613 (2) (11,744 ) 26,869

66,647 (1a),(1b),(5),(7),(8) 923 67,570 67,180 (1a),(5) 301 67,481 80,572 (1a),(1b),(5),(7),(8) 923 81,495

119,393 107,332 77,180 77,481 129,185 118,364


GAAP transition

to AIFRSs AIFRSs


GAAP transition

to AIFRSs AIFRSs

86


33 NOTES TO THE STATEMENT OF CASH FLOWS

(a) Reconciliation of cash

For the purposes of the Statements of Cash Flows, cash includes cash on hand and at bank and short-term deposits at call, net of outstanding bank overdrafts.

Cash as at the end of the fi nancial year as shown in the Statements of Cash Flows is reconciled to the related items in the balance sheets as follows:



Note $’000 $’000 $’000 $’000

Cash 8 6,455 3,366 6,454 3,337

Bank overdraft / loans 16 (2,019 ) - - -

4,436 3,366 6,454 3,337

(b) Reconciliation of operating

Profi t after income tax to net cash

Provided by operating activities

Operating profi t after income tax 18,487 16,044 19,657 22,983

Add/(less) items classifi ed as investing/fi nancing activities:

Interest received (4,954 ) (5,495 ) (5,241 ) (5,491 )

Leverage lease income (96 ) (86 ) (96 ) (86 )

Interest expense 24 - 1 -

(Profi t)/loss on sale of non current assets (93 ) (260 ) 24 8

Consideration paid for tax losses - - - 4,289

Add/(less) non-cash items:

Doubtful debts - (40 ) - -

Depreciation 3,731 3,363 3,381 2,968

Fair value adjustment on all fi nancial instruments (817 ) - (817 ) -

Pension costs (739 ) 109 (739 ) 109

Revaluation decrements - 612 - -

Investments amortisation - 6 - -

Self insured warranty 176 4,160 176 4,159

Self insured worker’s compensation 2,013 3,024 2,013 3,023

Income tax expense 7,835 4,439 8,283 8,728

Income tax paid (13,452 ) (6,546 ) (13,452 ) (10,836 )

Impairment of investment in subsidiary - - 2,600 -

Net cash provided by operating activities

before change in assets and liabilities 12,115 19,330 15,790 29,854

Change in assets and liabilities

(Increase)/decrease in receivables (1) 5,091 (11,651 ) 6,077 (12,554 )

(Increase)/decrease in inventories 10 3,364 (3,310) 3,294 (3,357)

(Increase)/decrease in prepayments 13 211 (168 ) 127 (156 )

(Increase)/decrease in net progress payments received (2) 10,999 (54,287 ) 12,256 (51,652 )

Increase/(decrease) in trade creditors (3) (49,363 ) 39,379 (46,427 ) 36,480

(Increase)/decrease in provisions (4) 2,117 6,617 1,847 6,579

Net cash provided by operating activities (15,466 ) (4,090 ) (7,036 ) 5,194




Note $’000 $’000 $’000 $’000

33 NOTES TO THE STATEMENT OF CASH FLOWS (CONTINUED)

(b) Reconciliation of operating Profi t after income tax to

net cash Provided by operating activities (continued)

(1) (Increase)/decrease in receivables is comprised of:

Prima-facie movement in trade debtors 9 5,168 (8,744) 6,154 (9,582 )

Prima-facie movement in sundry debtors and other loans 9 (77 ) (2,907 ) (77 ) (2,972 )

5,091 (11,651 ) 6,077 (12,554 )

(2) (Increase)/decrease in progress payments is comprised of:

Prima-facie movement in net progress payments 15 10,976 (55,813 ) 12,256 (51,652 )

Adjustment for unrealised intercompany profi t 23 1,526 - -

10,999 (54,287 ) 12,256 (51,652 )

(3) Increase/(decrease) in trade creditors and accruals is comprised

of: Prima-facie movement in trade creditors & accruals 15 (49,363 ) 39,379 (46,427 ) 36,480

(49,363 ) 39,379 (46,427 ) 36,480

(4) Increase/(decrease) in provisions is comprised of:

Prima-facie movement in provisions for employee

entitlements 17 1,072 2,626 408 2,626

Movement in provisions for warranty 17 1,624 1,440 1,624 1,440

Movement in provisions for self insured worker’s

compensation 17 (80 ) 2,955 (80 ) 2,955

Prima-facie movement in provisions for redundancy

and termination 17 (164 ) 163 (164 ) 163

Prima-facie movement in other provisions 17 (335 ) (567 ) 59 (605 )

2,117 6,617 1,847 6,579

(c) Reconciliation of net (increase)/decrease in

Invested funds

(Increase)/decrease in term deposits 8 - 888 - 888

(Increase)/decrease in marketable interest securities 11 24,661 1,665 24,661 1,665

Profi t/ (loss) on sale of securities (24 ) (15 ) (24 ) (15 )

24,637 2,538 24,637 2,538

88

Corporate DirectoryDirectors

John B Prescott AC

Chairman

Greg R Tunny

Managing Director and

Chief Executive Offi cer

Charles N H Bagot

Graeme R Bulmer

General (Retd) John Baker AC DSM

Company Secretary

Tony Kuhlmann

Auditors

Australian National Audit Offi ce (ANAO) and

KPMG (as agent for ANAO)

Solicitors

Mallesons Stephen Jaques

Bankers

Westpac Banking Corporation

Registered and Head Offi ce

Mersey Road, Osborne

South Australia 5017

GPO Box 2472, Adelaide


Telephone: +61 8 8348 7000

Facsimile: +61 8 8348 7001

Offi ce of the Chairman

28/140 William Street, Melbourne

Victoria 3000

Telephone: +61 3 9642 2518

Facsimile: +61 3 9642 2517

Offi ces

ASC Shipbuilding

Mersey Road, Osborne


PO Box 474, Port Adelaide


Telephone: +61 8 8248 8400

Facsimile: +61 8 8341 8073

Western Australia

PO Box 599, Rockingham

Western Australia 6168

Telephone: +61 8 9553 5566

Facsimile: +61 8 9553 5560

Canberra

Level 11, St George Centre

60 Marcus Clarke Street, Canberra

Australian Capital Territory 2601

Telephone: +61 2 6243 5131

Facsimile: +61 2 6243 5143

Useful Email Contacts

Employment enquiries:

[email protected]

Media enquiries:

[email protected]

Other enquiries: [email protected]

Website

www.asc.com.au

Copies of annual reports for ASC Pty Ltd

can be found on www.asc.com.au

Copies can also be requested by

telephoning +61 8 8348 7000 or

emailing [email protected]


www.asc.com.au

Documents

2006 ASC Pty Ltd Annual Report · & Cox and Navantia. Significant progress has been made towards meeting DMO’s objectives. The establishment of the AWD Systems Centre in Adelaide